Canada: Soundcloud’s Copyright Woes

Soundcloud is a popular website/app amongst internet music lovers and artists worldwide, providing a platform for the uploading of music (and other forms of art) by artists and users alike to be shared with the Soundcloud community. Developed in 2008, Soundcloud is recognized as an effective promotional tool, often compared to other similar websites/apps such as MySpace and YouTube.

Unfortunately, it also shares other less desirable similarities with such user driven media upload sites: an elevated potential for copyright infringement of third party rights. Soundcloud does not monitor the content that is uploaded to the platform according to its "Terms of Use" (in fact it states in its "Terms of Use" that there is "no legal obligation to monitor" the uploaded content), seemingly trusting that users will not infringe third party rights, an act that is prohibited according to these same "Terms of Use".

Soundcloud's copyright problem

Despite the warnings in the "Terms of Use", alleged infringing material was and continues to be uploaded to Soundcloud. For those unfamiliar with the term, copyright (generally, but more specifically in Canada) is the sole right to produce or reproduce the work or any substantial part of a work in any material form whatsoever, to perform the work or any substantial part of it in public or, if the work is unpublished, to publish the work, whether whole or any substantial part thereof. The Canadian Copyright Act sets out a panoply of rights that flow from these.

In the case of Soundcloud, infringement occurs when users upload or make available online through the Soundcloud platform "copies" of a copyright protected work whose rights are owned by a third party without its permission to do so. In the USA, record labels generally own the rights associated with recorded music.

Soundcloud's reaction

In light of criticisms and threats from major rights holders (major record labels), Soundcloud reacted. It makes clear in their "Terms of Use" that upon receiving a complaint from a third party rights holder, it will block/remove the infringing content or, in the case of a user who has infringed a third party's copyright multiple times, block the account, in accordance with the USA's Digital Millenium Copyright Act (DMCA), section 512(c)(1). This provides Soundcloud with a certain amount of immunity. Should the original uploader wish to dispute the removal of content from the platform a mechanism does exist where it can file a complaint with Soundcloud to that effect, but this typically and practically only occurs after the content is removed from the account in question.

What does section 512(c)(1) of the DMCA provide?

Section 512(c)(1) of the DMCA is a provision that is familiar to many networks and site operators. It provides limitations to liability for material posted and found online. The host of the online platform or website is generally not liable for monetary, injunctive or equitable relief as a result of copyright by reason of storage of infringing material on the network or platform by a user if, amongst other things, it does not know the material is infringing, acts expeditiously to remove the infringing material once made aware of its existence and does not receive a financial benefit that is directly attributable to the infringing activity. This is known as the "Notice and Take Down" approach.

In its 2012 reform of the Canadian Copyright Act, the conservative government chose instead the much more feeble and tame "Notice and Notice approach" where the service provider does not have to remove the infringing content, but only has to notify the uploader (and potential infringer) of the alleged infringement.

Where is this headed?

Despite the measures taken by Soundcloud, copyright infringement remains prevalent in the service and an issue for major rights holders. Notwithstanding the safeguards taken by Soundcloud, the threat of a law suit for copyright infringement against it remains. Due more than likely to Soundcloud's aversion to a full on legal battle with the music giants, an interesting (potential) alternative resolution to the seemingly inevitable oncoming conflict has been proposed: equity in Soundcloud to the major record labels in exchange for an agreement not to sue. Media accounts reveal that anywhere between 3 and 5 % of Soundcloud is being offered. Whether Soundcloud and the major record labels come to an agreement is to be seen.

This post was originally published on nationalmagazine.ca.

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