ArtsWatch: Malware Costs Consumers Billions

Study estimates the global harm caused by digital infections
March 24, 2014 -- 6:41 am PDT
By Philip Merrill /

In recent news ...

Microsoft Promotes Awareness Of Digital Vulnerabilities
On March 18 Microsoft's Digital Crimes Unit released its sponsored white paper "The Link Between Pirated Software And Cybersecurity Breaches — How Malware In Pirated Software Is Costing The World Billions." Produced jointly by research firm IDC and the National University of Singapore, the study's topline numbers estimate that consumer costs from infectious malware in 2014 will total $25 billion and 1.2 billion hours of wasted time. For business enterprises, the estimated costs are $491 billion. Microsoft's Play It Safe initiative has a lot to gain commercially by encouraging computer purchases from the most reputable sources and the use of regularly updated security software, but these scare tactics seem justified if the study's results are accurate.

Viacom And Google Settle
Seven-year litigation between Google and Viacom over Google-owned YouTube's alleged copyright infringement was settled on March 18. The Southern District of New York's U.S. District Court initially granted the Internet service provider's motion for summary judgment under safe harbor protection. Viacom succeeded in its 2012 appeal before the Second Circuit Court of Appeals, with an important ruling that "willful blindness" should be considered. This sent the dispute back to the lower court, which ruled again that YouTube qualified for "safe harbor" protection. Following another Viacom appeal, as oral arguments scheduled for March 24 loomed closer, the two companies resolved their lawsuit and released a joint statement that said, "This settlement reflects the growing collaborative dialogue between our two companies on important opportunities, and we look forward to working more closely together." Following the ruling, Sandra Aistars, CEO of the Copyright Alliance, which includes The Recording Academy as a member, released a statement citing her hope that "cooperative solutions" would expand to independent creators who cannot afford extended litigation or the "enormous challenges" of pursuing each infringing use of their work on the Internet. On March 19 the jury in a separate trial before the Southern District of New York's U.S. District Court found MP3tunes founder Michael Robertson guilty of willful blindness to infringement, a result partly due to Viacom's 2012 victory on appeal. Coincidentally, that lawsuit also began seven years ago. It will now proceed to determine Robertson's financial penalty.

IFPI, RIAA Report Good News For Recording Industry
On March 18 IFPI issued its international Digital Music Report for 2013 and RIAA summarized last year's shipment and revenue statistics. Global paid subscribers topped 28 million people. Streaming revenues overall generated more than $1 billion in revenues for the first time — a growth rate of more than 51 percent over 2012. Many emerging markets enjoyed spectacular growth and the only major dark cloud on the international scene was Japan's decline of 16.7 percent. In the United States paid streaming subscribers are now more than 6 million, with a 57 percent growth rate to $628 million in revenue. Streaming revenues overall grew by 39 percent to total $1.4 billion.

Rate-Setting Court Keeps Pandora Status Quo
The Southern District of New York's U.S. District Court resolved an active dispute between ASCAP and Pandora on March 14 by maintaining the royalty status quo. Pandora has been paying 1.85 percent of revenues to ASCAP and will continue to do so. ASCAP had argued higher rates were justified by the marketplace, but Pandora countered that since it bought a terrestrial radio station, it was entitled to the lower 1.7 percent rate for broadcasters. After the ruling, ASCAP CEO John LoFrumento was pleased Pandora's rates had not been lowered but said the "decision further demonstrates the need to review the entire regulatory structure, including the decades-old consent decrees that govern PRO licensing, to ensure they reflect the realities of today's music landscape." In related news, on March 18 Pandora announced it will raise its ad-free, paid subscription rates for new subscribers by $1 per month, applying the same increase to existing subscribers who paid annually. The need for higher rates was attributed to escalating SoundExchange payments. Pandora commented, "Our listeners are our top priority and, while this affects only a small percentage of our listeners (3.3 million subscribers of more than 250 million registered users total), we hope that you understand why we have taken these steps."

The Recording Academy actively represents the music community on such issues as intellectual property rights, music piracy, archiving and preservation, and censorship concerns. In pursuing its commitment to addressing these and other issues, The Recording Academy undertakes a variety of national initiatives. ArtsWatch is a key part of an agenda aimed at raising public awareness of and support for the rights of artists. To become more involved, visit Advocacy Action @ and sign up for Advocacy Action E-lerts.

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