Defamation: Libel Tourism June 2009

In the United States freedom of speech is protected by the First Amendment to the United States Constitution and by many state constitutions and state and federal laws.

It is not surprising that in the United States the burden of proof for defamation is on the Claimant to prove that what was written or said was false. In the United Kingdom the burden of proof is on the Defendant to prove that what was said or written about the Claimant was true. The contrast in where the burden of proof lies between the two countries is just one of the ways in which you can see how different countries balance out freedom of speech and defamation. This difference has led to individuals forum shopping in different jurisdictions for the most Claimant friendly jurisdiction to bring an action for defamation a phenomenon called “libel tourism”.

The Internet has blown the realm of defamation wide open with instant access, this fact, coupled with broad principles of UK jurisdiction has helped London become the most popular tourist destination for online defamation claims. Ever since the old case of Duke of Brunswick v. Harmer in 1849 which established the multiple publication rule, UK courts have repeatedly held that even where the defendant’s publication is distributed mainly in another jurisdiction, as long as it is downloaded by a number of readers in the UK then that is enough to constitute a separate actionable publication in the UK.

It is also worth noting that even if the publication has been on the Internet for over a year. The publication starts running again from the next time it is downloaded.
Take for example the Ukrainian businessman and legislator Rinat Akhmetov who brought 2 proceedings in the High Court of Justice, Queen’s Bench Division in London. In one of the cases, Akhmetov secured a quick apology and a settlement. The other claim was against the internet publication OBOZREVATEL. According to reports Mr Akhmetov won a default judgment of £50,000.00 against this website which only published in Ukranian.

In Berezovsky v Forbes, Russian Oligarch Boris Berezovsky sued American publisher Forbes over accusations of corruption in a magazine article in the UK Mr Berezovsky could do so since there were readers who had downloaded the material in the UK and he had a reputation in the UK. The UK courts do not always take the view that UK has jurisdiction in all such cases. In the case of Dow Jones & Co Inc v. Jameel. A claim for libel was brought against the Wall Street Journal OnLine article report that alleged that financial support had been provided by Saudis to Al-Qaeda, which hyperlinked to a list of alleged donors to Al-Qaeda including the name of Mr Jameel. As only five people had downloaded the article in the UK the Court of Appeal dismissed the claim for negligible publication as an abuse of process.

Even if a Claimant is successful in bringing a claim in the UK for defamation relating predominantly in another jurisdiction, it is not clear whether such UK judgments would be enforceable in any other country, so it is worth checking that the defendants have sufficient assets in the UK to enforce judgment before bringing a claim.

Event: Barclays Bank Plc and Peter Adediran Internet Lawyers present an event on the Business and Legal aspects of Web 2.0 and Social Networking

Online Social Networking

We are in the Facebook, My Space and You Tube era. Over 150 million people are logged in to Facebook and businesses need to be where their customers are. The web and Internet has gone back to what it does best which is to facilitate communication. However along with the benefits of a map of every person on the internet and how they are connected come some major legal challenges.

Successful adoption of online social networking for enterprises requires careful planning and execution. The key risk areas of Web 2.0 and online social networking are:

the technical aspects of the web such as Web 2.0 server software; content syndication; messaging protocols; standards oriented browsers; and plugins & extensions all have intellectual property infringement, invasion of privacy and trespass implications.

Safeguarding intellectual property against competitive and malicious threats is another key risk area. As always there is the issue of who owns the rights to content on the internet? What is the scope of the doctrine of fair dealing in respect of the content in the Web 2.0 context?

The concept of putting bad feelings behind you and starting again is fraught with difficulty on the internet. As recent cases have shown, although a web server is supposed to contain a permanent trace of internet activity and search engines are supposed to be trail markers on the web it is surprising how information just seems to be inaccessible. What obligations do website owners have to their users or to law enforcement officers to retain such data?

Are applications really free on social network sites? Ofcourse applications on social networks are not free because businesses pay to advertise on the applications. Social networks allow for hypertargeting of advertisements to very specific criteria because of the information social networking members elect to share on their profiles. What implications does this have for privacy?

Finally there is the increasing pest of malicious anonymous postings in discussion groups damaging reputations that have taken years to build. How do you limit your legal exposure if someone is using your website in this way? How do you verify user’s identities? How do you restrict libellous content on your website or respond to harmed parties?

On the 2nd July 2009 from 9:30 am to 11:00 am the writer will give a presentation on how to overcome the legal challenges set out above at Barclays Plc, Head Office, Level 30 1 Churchill Place, Canary Wharf E14 5HP. There will be 2 other expert speakers at the event.
Attendance is by invitation only. If you are reading this posting and wish to attend, please let us know by sending a request for an invitation to peter@peteradediran.com.

Blog Article May 2009 Internet Litigation, UK Jurisdiction and Evidence

Anyone who has ever had to deal with issues of jurisdiction or evidence gathering in an Internet related law suit will know what I am talking about when I say these issues have their challenges for lawyers.

The case of Al Amoudi v. Brisard and another [2006] EWHC 1062 (QB) in the High Court Queens Bench Division is a good example of a lawsuit that involved the issues of jurisdiction and evidence relating to the Internet.

On 9 December 2004, claimant Mr Mohammed Hussein Al Amoudi made a libel claim against the defendants M Jean-Charles Brisard and JCB Consulting International SARL with respect to two articles prepared by the 1st defendant M Brisard and posted on the website of the 2nd defendant JCB Consulting International, access to which is available commonly. At the heart of Mr Al Amoudi’s claim was the assertion that there was a rebuttable presumption of law that an article placed on an Internet website that is open to general access has been published to a substantial number of people within the jurisdiction. In their Defence the defendants denied that there had been any such substantial publication of the words complained of, in other words, that there was no such presumption of substantial publication merely by the offending content being made available to the public through the website in the jurisdiction. Mr Al Amoudi’s lawyers were convinced that the defendants had no real prospect of defending the issue at trial and applied for summary judgment regarding those aspects of the defence which contest that publication had taken place “within the jurisdiction”.

The application for summary judgment failed and Gray J handed down judgment refusing the request to remove the statement in the defence denying substantial publication.

In summary the arguments in favour of Mr Al Amoudi were as follows:
1. That serious charges relating to international terrorism are involved and that the items published were made available to a “substantial” quantity of readers in the UK jurisdiction.
2. While there is no precedent supporting that the rule for newspaper and book publication may be applied to Internet posting, the generally recognized practice is that where the publication in question is addressed to the world in general, the claimant is not required to prove publication to individuals.
3. The English court has already evaluated damages in connection to another publication by this defendant on the same website.
Argument in favour of M Brissard and JCB Consulting
1. That the claimant only relies on the presumption of damage and that he has chosen not to sue the defendant in the US, Saudi Arabia or Switzerland, calling for a more cautious approach by the court.
2. That it is a misconception under English law to presume that because an item is available on the internet a substantial amount of readers have gained access to it.
3. It can be claimed that publication over the Internet has taken place if and only if the material is accessed and downloaded by a third party within the jurisdiction; and only at trial can the claimant assert that a jury would be perverse not to draw such inference.
4. That the issue of the extent of publication of the two items should be left to the jury to decide on the evidence.

Conclusion

A dispute existed between the two parties as to the difference between a presumption and an inference that the words of the items published on the internet were made available to a “substantial but unquantifiable” amount of readers in the UK jurisdiction. For many reasons, the court held that it cannot be immediately accepted under English law that a claimant may rely on a presumption of law that a substantial publication has taken place merely because an item has been published on the Internet. However at trial, the jury after the exchange of witness statements may infer that there was substantial publication of the said items within the jurisdiction. It is also important to note that It can be claimed that publication over the Internet has taken place if and only if the material is accessed and downloaded by a third party within the jurisdiction. So if you think that you might be in an Internet dispute you need to make sure you get the evidence at the time of the offending behavior. The more evidence you can gather and store safely the stronger your case will be when you eventually end up in court.

Blog Article Apr 2009 Intellectual Property Rights and Code Writers

As is well known, Mark Zuckerburg’s Facebook was being sued by Connect U in 2007 who claimed that Zuckerburg was commissioned to write the code for their Harvard Connection Project but instead had stolen their ideas to set up Facebook.
 
The accusations were for fraud, copyright infringement and misappropriation of trade secrets. According to the Reporter, Facebook settled out of court for $65 million in a part cash part shares pay out announced in April 2008. This high profile case is a good illustration of a very common occurrence between developers and clients.
 
The problem of who owns what does not seem an important one until suddenly your concept is valued at $15 billion. It should be important to you from the outset. When commissioning developers ownership of the intellectual property rights in the end product should be very specific. The developer will be writing the code using its tools, software and business methods. It may also be using third party software.
 
So the developer may use its own methodologies, source code, object code, know how, trade secrets or inventions (whether or not patentable). The client may not be entitled to the creative development process behind the developers work. The client will be entitled or should be entitled to the end-product. The client may be entitled to the object code underlying the creative work.
 
There is also the issue of the scrip code being secure enough to withstand the numerous attacks of hackers. The time where you simply put up a sleek looking website and start trading is past you now need to consider the issues involved more carefully.

Blog Article Mar 2009 A Pain In The Terms and Conditions

If you have heard of Gary Cooper the 16 year old teen prodigy, then you may know that his online shop GC´s PC´s is under investigation by the trading standards.
 
In general misleading claims on companies websites should be reported to your local trading standards department (www.tradingstandards.gov.uk). Advertisements on websites such as banner ads and pop ups, special offers, prize draws and competitions are the ambit of the Advertising Standards Authority. Where the ASA do not have authority they can pass your complaint on to the Office of Fair Trading or to Ofcom whichever is more appropriate.
 
A number of complaints and claims were made against Mr Cooper alleging inter alia false and or misleading advertisements; unauthorised charges; and breaches of the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982. According to Computer Active issue 287 Mr Coopers “terms and conditions on his webiste are contradictory muddled and in parts breach consumer statutory law”.
 
Sadly on a cursory look at a muber of companies websites Mr Cooper´s terms and conditions are certainly not the exception. You may feel that a condition is unnecessary or expensive to implement but the point in fact is that non-complaince with the law could cost you a lot more in the long term and may even cost you your business. Courts will often not enforce onerous and muddled terms. Also consumers are increasingly savvy about what their rights are.
 
The laws you should consider in preparing your terms and conditions should include: The Consumer Protection (Distance Selling) Regulations 2000; The Electronic Commerce (EC Directive) Regulations 2002; and the The Privacy and Electronic Communications (EC Directive) Regulations 2003. Not taking laws relating to web business seriously may become a pain in your terms and conditions, as it is alleged has happened to Mr Cooper.

Blog Article Feb 2009 Can experiential retail save this iconic brand?

HMV Oxford Street London - Get Closer

Long time running music retail specialist chain HMV has been under new management with the appointing of Simon Fox since 2006.
 
Fox, who after having a couple years to review the company’s progress, is finally reacting to the declining profit margin and declining retail sales of recorded music that have caused the company such turmoil in recent years.
 

With the direction of their new more ‘visionary leader’, HMV has made several other changes. HMV has made an attempt to re-brand themselves as an ‘entertainment retailers’, general retailers of everything and anything entertainment. And they claim it is working, boasting a turnover increase for HMV UK and Ireland of nearly £150 million in 2008 (HMV Group, 2008). Gennaro Castaldo, Head of PR for HMV admits “during 90’s which kind of coincided with our growth as a company we probably focused to much on commercial side and we didn’t sort of put enough care and attention in the HMV brand and how we thought to actually engage with our customers and we recognise that partly through necessity as much as anything else. We have to find another way to engage with our customers” (Castaldo, 2008).
 
In the autumn of 2007, HMV also trialled new ‘concept stores’ in rural shopping malls in the United Kingdom such as Dudley in the Midlands, suggesting that at last they have realised what other high street retailers and music retail independents have about ‘experiential retail’.
 
HMV claims all product lines in the trial outperformed the rest of their stores and HMV now has plans to open more concept store. The stores offer an aesthetically appealing environment and invite consumers to come in and interact with video screens and gaming trials. On the media side of things, consumers will come into store and to interact in their hands on computer zone to ‘social network’ in store, buy online and order online. By offering in-store online ordering HMV mentions that they reduce their catalogue offering and prevent obsolete stocking issues (Castaldo, 2008). They have also developed a new re-branding strategy with their marketing campaign titled ‘get closer’ with quotes and lyrics from famous musicians and movies (Castaldo, 2008).
 
But exactly how does the campaign, or the experiential store for that matter, get consumers any closer to the music, movies or games that they love? Is the notion of coming in-store to sit at a computer and do what they can do from the comfort of their own homes appealing to consumers? Is this a wow factor move for HMV or is it a realistic viable business solution?

Blog Article Feb 2009 Music Consumptions is Declining: Uncovering this Myth.

The recorded music industry in the United Kingdom and worldwide has been hit hard by the decrease in trade value of recorded music over the past few years, which fell by 13.37% in 2007 alone, falling below ₤1 billion for the very first time since the 1990s. This downward trend represents an industry entering into the decline phase of the product/business life cycle (Hill and Jones, 2004).
 
In conjunction with this decline, or arguably one of the culprits of this decline, are music retailers, sellers of recorded music, who have seen a decline in music retail sales of 14.5% in the last year. For physical music retailers, in particular physical music specialist chains, who have held the majority of sales and market share for recorded music since their inception in the 1920s, this is a major affliction to their business. While the facts would suggest that music consumption is declining, this may not be the case.
 

Music consumers in today’s economy of abundance are consuming more music than ever before and accessing music across a multitude of platforms, including live, physical recorded, digital recorded, peer-to-peer, streaming, music videos, music in games, and many more (Jennings, 2007). It is estimated that in 2006, consumer spending on entertainment in the United Kingdom was 17% of all disposable income and rising, which is more than the amount spent on housing and food (Howkins, 2007). Unlike, digital sales for music, the majority of physical sales, 60.2% for 2007, are made by older buyers over the age of 35, and of this 60.2%, 41.2% of this physical consumption is made by women, suggesting a completely different target market for physical music consumers than in the past (predominantly male, under the age of 20) (BPI, 2008).
 
Not only is recorded music sales still a major revenue stream to tap into for the music industry, but the opportunity for physical retailers is an undeniable one. Physical music sales still represent over 90% of album sales (BPI, 2008). Sales for the seven-inch format vinyl rose to over one million last year, up from 201,380 in 2000 representing a revival in popularity for this format amongst consumers (Kearns, 2008). And while digital is a growing area and one that must concentrated on in order to offer customers multi-channel options, digital retail sales in the United Kingdom still only represents ₤145 million in retail value, which is only 10.2% of the total music retail value. Physical sales still hold over 85.2% of sales with a retail value of over ₤1.2 billion (IFPI, 2007). The same goes for digital sales world-wide. Digital sales account for an estimated 15% of the global music market (IFPI, 2008). In the United States similar evidence would support this notion of physical consumption still existing in an ever present way on a global scale. Josh Groban (a vocal pop singer appealing to exactly the demographic of the HMV consumer, +35 and female) released the album ‘Noel’, which sold over 3.7 million units, 97% of which were bought in the form of a physical album (Christman, 2008). In addition, the sale of music is still largely a retail environment that invites purchases for gifting; making physical music an attractive buy for consumers (one can not very well wrap up an MP3 file). HMV admits that gift buying accounts for 50% to 60% of physical stock in HMV stores (Castaldo, 2008). And from a self conducted survey on Oxford Street, 36 out of 40 respondents said they still buy music in a physical form. The United Kingdom is at a particular advantage to this interest in music as well, considering British artists accounted for 51.9% of albums sold in the UK in 2007 (BPI, 2008), representing the strength of the British music scene and an opportunity for music retail in the United Kingdom to take notice.

Blog Article Feb 2009 Ticketmaster May Get Scalped!

So a hustler picks up 20 tickets to a “NAS” concert or a UFC tournament at £100 and £70 each respectively. The same dude then hangs out at the venue gate with the tickets. He resells the tickets for £400 and £200 each respectively to Joe punter. That’s £8,600 profit tax free because I can bet my bottom dollar that this guy does not declare his income to Gordon Brown’s government. As morally reprehensible as this little bit of capitalism is, it is not without some excitement. It takes skill to be able to know which concerts will be sold out and which will fail. If the hustler gets it wrong he may lose his initial investment if he is unable to sell the tickets. At our most cynical one could say this is Adam Smith’s “invisible hands” of commerce at work. The natural commercial evolution of the ticket sales market. Also there are normal customers who have simply bought too many tickets and need to sell them.
 
There is the other side which I consider to be the more accurate appraisal of the aforesaid hustle. There is the feeling that Joe punter has been unfairly manipulated. By buying up all the tickets, the hustler prevents the normal customer from acquiring the tickets themselves in the normal way. Consequently forcing the customer to buy the ticket at a higher price from the hustler.
 
In some parts of the world like Canada, reselling tickets as the hustler does is illegal and is popularly known as ticket scalping. This month in Vancouver (within the province of British Columbia) the very popular ticket sales company Ticketmaster faces a $500 million class action law suit that it violates anti scalping laws. The law suit claims that Ticketmaster alledgedly conspired with its subsidiary ticket auction website TicketNow.com, to sell out tickets through Ticketmaster driving demand to TicketNow.com, which sells tickets at much higher prices. In other words Ticketmaster is being accused of allegedly hustling its customers.
 
In the UK it is legal to buy and resell tickets. There are however growing calls for legislation in this area mostly by special interest groups like ticket agencies, the music industry and auction websites. Those interest groups should take note of Ticketmaster’s current troubles.

Blog Article Feb 2009 Where Does the Future of Music Subscription Lie and Why?

The music industry has gone through an abundance of changes over the last few years. Not only did several high street retailers (Music Zone and Fopp for example) collapse, but there was a significant decline in the sale of recorded music in the United Kingdom (UK physical retail format down £182m in 2006 (BPI, 2007).

With the advent of internet downloading, file-sharing, and the unbundling of album tracks for individual sale, the meaning of the charts has been transformed completely. Industry players are now we left wondering where the future sales in music live. Many suggest the future for the United Kingdom Music Industry lies in music subscription services and others feel the a la carte model is best suited to the current state of the music consumer market. However, neither of these services, even if they joint together as a model, are the future of music sales as they both ultimately fail to deliver what consumers really want: complete freedom and choice, only attainable through a model of mass customisation.

The ‘a la carte’ option, or the concept of unbundling albums into single track purchase options, was made available in the United Kingdom by iTunes in 2004 (BPI Online, 2008). iTunes has since managed to control a monopoly in this market for the past four years, overtaking Amazon and target in the USA to become the third largest music retailer worldwide (IFPI, 2008). Itunes offers a catalogue of over six million songs to UK consumers (iTunes, 2008). While sales of digital music still only represents 15% of the total value of the music sales in the UK, and have yet to make up for the drop in overall music industry sales, digital single track purchases are on the rise, and grew by over 48% in 2007 in the UK alone (IFPI, 2008). The singles market is now dominated by sales through digital and mobile platforms, with over 90% being sold in this way (BPI, 2008). A reported 8% of internet users in UK also claimed to be regular single track buyers according to Jupiter research in 2006 (BPI, 2007), which is the highest rate in Europe. Since the emergence and success of iTunes, other companies have been close on their trail, working with record labels and independent artists in an attempt to get together a large enough catalogue to enter into the digital music market. The result has been new a la carte and album offerings at comparable prices from other UK players such as Napster Digital, Wippit, Virgin Digital, Tesco Download HMV, eMusic and Ministry of Sound to name a few (BPI Online, 2008) (See Appendix 1.1 for a full list of legal music services in the United Kingdom).

Some of the Pros and Cons of a la carte services are listed below.

Pros:

Users who purchase via this method ‘own’ the music they buy and have the ability to put there music on portable devices and back it up (Vance, 2005)
Consumers can buy selected tracks from an album without having to purchase the whole album, allowing them flexibility to own exactly the tracks they want to own (Orlowski, 2007).
Provide better quality downloads and ‘extras’ included in the single track fee (BPI, 2007).

Cons:

Highly disposable nature of much popular music in recent years makes a la carte purchases an expensive habit to have (Smith, 2005).
DRM free tracks were only recently made available, however they are still scarce and ‘free’ illegal downloads are still being made available (Resnikoff, 2007)
People still buy physical formats. Around 85% of music industry sales world-wide are still derived from non-digital formats. This means a la cart services are all competing for 15% of all music sales in 2007 (IFPI, 2007).
Music Subscriptions Services

Music subscription services, as opposed to a la carte services, offer a music library of songs to users in exchange for set monthly fee or annual fee (Gruber, 2006). When music subscription services first came out, users were able to download or stream music onto their PC but were unable to transfer the music to hand held devices such as mp3 players and mobile phones. Recent advancements in several of the services however, now allow consumers to take their music with them (but for a premium price monthly price). Mobile based subscription services are popping up as well, such as Music Station, which allows consumers more flexibility with their music by giving them the ability to download music while on the go (IFPI, 2008). Microsoft has a new version of Zune, offering access to 3 million songs in the Zune Marketplace for only $14.99 per month (around £7.50 per month). Napster offers subscription for £8.95 per month with the option to purchase tracks for an additional £0.79 per track. They also have an ‘on the go’ service that allows users to take there music with you on portable devices (Napster, 2008). The services are adapting to include a more comprehensive product offering, such as Zune and Napster, whom also offer a la carte services for consumers. Zune goes one step further and even offers social networking functions (Burrows, 2007).

Some of the pros and cons of the subscription model are listed below:

Pros:

· The subscription method provides a cost effective way to consumer music, especially for high volume users who consume and stream a large quantity of music (Smith, 2005). It is said that subscription approach offers total on-demand access that’s worth paying for (Burrows, 2007).

· Consumers like to forage for information, subscription services allow consumers to do this at an affordable price (Jennings, 2007)

· Owning music is no longer a necessity for some segments, the weight for younger ‘net’ generations is put on access, not ownership (Leonhard, 2001).

· Many subscription services have recognised the importance of mobility and offered it along with subscription service. Such companies as Napster On the Go and Music Station are increasing the reach to specific music consumers by bundling services with convenience (Music Station, 2008).

Cons:

· Many people are uninterested in another monthly bill. Much like being locked into a lengthy mobile phone plan (Burrows, 2007). Users pay money but if they are not accessing it at a certain level of usage, they may end up spending more for the same consumption as if they had purchased a la carte (BBC News, 2005).

· Users do not own the music, and will only be able to access it so long as they continue to pay the subscription. Consumers you are locked in trade-off between quantity and permanence (Vance, 2005).

· Interoperability, DRM and licensing are holding back subscription services. And while technical solutions are a priority for labels and industry players, the difficulties have yet to be solved (IFPI, 2008). The UK can generate more money from multi-platform means if they can manage to set them up, and quickly (BPI Report, 2007).

· Over 55% of music sales in 2005 came from the 30 years plus age group, who prefer a model of simplicity, over a mass consumption model such as a this (BBC News, 2005).

Where is the future of music consumption and why?

As demonstrated above, subscription and a la carte services do have appeal for certain segments of the music consumer market, and at the same time they have lack appeal for other consumers. One must remember that the digital market space still only represents 15% of music industry sales (IFPI, 2008), meaning that while some companies like Napster may be creating more comprehensive models, all of the players in both subscription and a la carte music services (see Appendix 1.1 for a complete list) are competing for a very small share of the music market. Over 96% of albums in the first half of 2007 were sold in a physical CD format (BPI Report, 2007). Coupled with the fact that the consumer market is increasingly fragmented in nature as every music consumer is unique, neither subscription or a la carte, even if put together as a model, will be able to capture a large enough margin of the overall music market to emerge as a future market leader in music sales and consumption.

Trying to sell any product to consumers in the current marketplace is a challenge for even the best companies. Competition in the music industry now exists on a global scale creating an increase to the already over abundance of goods and services in today’s market. The economy has fully come into a pull versus a push economy, where mass marketers can no longer continue to group consumers into large segments of generic users. Consumers are taking control in the abundance of products and services making them price makers, product creators (Robert, 1995). In addition younger generations who have grown up with the internet and technology are “already accustomed to personalising their own experiences and the effect will no doubt follow them into adulthood” (Mininni, 2007). Mass marketing tactics and selling tactics have very little effect of this new ‘net’ generation of consumers (Leonhard, 2001).

Digital distribution is also affecting the fragmented music market further by breaking consumers down into smaller niches, as can be seen with the growth of a la carte sales where consumers are purchasing songs instead of albums (IFPI, 2008). Consumers also have very individual taste profiles and enjoy consuming music in several different ways (Jennings, 2007).

The industry has thus far been unable to make accurate predictions about consumer behaviour. Everyone though physical, including vinyl sales were dead. However, the sales for the seven-inch format vinyl rose to over one million last year, up from 201,380 in 2000 (Kearns, 2008) and CD sales still represent 96% of all album sales (BPI Report, 2007). The industry also thought copyright restrictions would eliminate the heavy traffic in downloading, however consumers have found new ways to listen to music for free on sites such as Lastfm, and Pandora. All of this creates a market place so fragmented it is hard to analyse through traditional methods of market research. The ability to predict consumer trends is increasingly difficult for researchers and companies to analyse (Click Noise, 2007).

David Jennings’ research in his book ‘Net, Blogs and Rock ‘n Roll’ shows that some consumers even want to be involved in the process of discovering music, recommending it, and passing it along to others. In addition some music fans also want to be ‘creators’, like Andy Aldridge who made a site for his favourite band Galaxie 500 an now manages it on behalf of the band, interacting and sharing with other like-minded fans This sort of consumer involvement not only creates a loyal consumer base for the band, but the fans help create buzz and marketing messages and drive sales that reach even further (Jennings, 2007).

As we now live in what Joseph Pine, Marketer and Author, terms the ‘experience’ economy, most products or services extended to consumers must have a certain element of consumer involvement and uniqueness in order to thrive (Mininni, 2007).

Is there a Solution?

Ultimately, given the market conditions as described above in Section 3.0, the only model that may be able to attract the masses of the music market is one which offers the consumer complete freedom and choice. Freedom can be defined as “the power to exercise choice and make decisions without constraint from within or without; autonomy; self-determination” (Freedom, 2008). Choice is “the power, right or liberty to chose, and to chose the best or most preferable part” (Choice, 2008). Freedom and choice are mandatory because every consumer is unique and experiences music in a disintegrated way. Consumers want to be involved (Tapscott, 2006) but also want to decide their own level of involvement, and the right price for each consumer is a personally tailored price according to the consumers perceived value of the offering (Mininni, 2008).

Suggested Model of Mass Customisation

A suggested way forward for digital music providers is to develop a produce and service model of mass customisation, allowing consumers the freedom and choice to design their own experience. The value for the consumer is achieved at a more profound level. Value comes from not only from the finished product or service, but the process and involvement in consumption as well (Mininni, 2007). Not only would a model such as this be able to extend its reach to all consumers in the digital market, but the model would also allow a provider to tap into the other 85% of physical music sales in the United Kingdom, along with all other related music services and products.

It is estimated that UK spend around 17% of their income on entertainment (Howkins, 2007) and the total value of the UK Music Trade Delivers was well over £1 billion in 2006 (BPI, 2007), making the opportunity for providers to exploit this industry an undeniable one.

While it may seem complicated and complex to set up, configuring products and services in a tailored manor and allowing for consumer involvement in creating the end product can bring a company a sustainable long term advantage and significant profits from premium offerings (Mininni, 2007).

How Does Mass Customisation Work?

If you can imagine all product and service components in the music industry grouped together in a model of flexible business units, integrated into one flexible network structure (Mininni, 2007). According to John Howkins, author of the Creative Economy, “the power of digital, as a symbolic language, has no material but only intellectual limits” (Howkins, 2007, 186). Consumers are able to choose different combinations of goods and services from an infinite number of options, bringing the consumer into the production value chain as a ‘prosumer’ (Tapscott, 2006). “Within a mass customization business, customers are integrated into value creation by defining, configuring, matching, or modifying their individual solution from of a list of options and pre-defined components. These co-design activities are performed in an act of company-to-customer interaction” (Piller, et al, 2005).

Although complicated as a model, if a company can successfully create an offering of uniquely designed and mouldable products and services, this method can be a significant tool in creating extremely high perception of value for the offering and high brand loyalty in consumers. In addition, revenue generated from ‘premium’ pricing for additional products and services can be the additional income that sets a company above the rest. The offering must give consumers enough flexibility for them to find a right fit for their needs, without creating confusion by an overabundance of options (Mininni, 2007).

Dell is a great example of a company who managed to offer ‘standard’ products and services with their ‘build to order’ customised offering, allowing consumers to design their own computer at a very low cost (Dell, 2008). Dell’s success comes in part with having a having all resource centres within the company flexible and interchangeable, allowing for complete fluidity amongst the flow of information and resources (Mininni, 2007). Net profits for the company have remained strong, raking in over $3.345 billion USD before tax in 2007 alone (Nasdaq:dell, 2008).

A more recent example of ‘mass customisation’ specifically from the music industry (albeit a rather simple one), was the offering made by Nine Inch Nails (NIN) for their new album ‘Ghosts’. NIN gave consumers the option to select which album version they preferred, with each offering the consumer a different level of value (see Table 4.1). In these scenarios, “premium pricing is perceive to be ‘worth it’ to the customer” (Mininni, 2007, 3) and in just over a week NIN generated over $1.6 million USD in revenues from this unique offering, which is quite impressive when music sales are declining (Ramadge, 2008).

What Could The Future Look Like For Digital Music Providers?

After consulting Net Blogs and Rock n’ Roll, Wikinomics, The Future of Music, all the major ways in which music is consumed and purchased can be considered as potential components of a model of mass customisation. A model might include some or all of the following:

· An a la carte music store (similar to iTunes)

· A Subscription service based on levels of usage, allowing consumers to determine if they want mobile options, additional track purchase bundles, etc (much like Napster.co.uk)

· An offering of physical music products ( c.d.’s, vinyl, and collectables)

· A Secondary sellers market, much like that of Amazon.com, where consumers have access to the ‘long tail’ of goods and can find unique and rare product offerings by access a unlimited number of suppliers

· An auction market, much like ebay, where consumers make bids depending on the price they are willing to pay for goods and services

· Music recommendation services such as Last Fm, allowing them to preview and discover new music, including a personalised stream of music, much like a personalised radio station

· Merchandise sale and ticketing sales, including secondary sellers

· A customer service component with real-time consultation to help guide consumers

· Social networking functions, such as instant messaging, friend networks, live video feeds, would surround all of the components in order to create an online community.

Industry services providers can take examples of customisation models from other industries (such as dell, build-a-bear and many others), even the example provided by Nine Inch Nails, and build their own unique and flexible network of networks. Amazon for example, who already has several of the above music components in place and has a proven track record for selling music, can add the remaining above mentioned elements onto their model to create the ultimate mass customised offering for consumers and a ‘one stop shop’ for all music consumers. Amazon already sells physical music products, including CD’s and vinyl products, boasts a hugely popular ‘secondary sellers’ market where every consumer is a seller in the sale of ‘long tail’ goods and has a soon to come MP3 store for the UK (Card, 2007).

Issues and Challenges for Digital Music Providers

While mass customisation may enable digital music providers to reach a large market of consumers with varying tastes and needs, several issues and challenges exist in allowing a model such as this to move forward with success.

Firstly, the financial outlay complexity of such a model provides a high risk to entry. There is significant capital needed to set up complex networks of flexible business units, and the rapid changing of the music industry means that a constant response and changing of inventory is necessary (Mininni, 2007). Already existing players, such as Amazon, iTunes, and Napster, who have the expertise and an already existing infrastructure may have the ability to create such a concept, but new players entering the industry may struggle with the capital outlay to get all the components in place. At the same time, the structures of the existing players may well be too rigid to allow them to adopt a flexible, interchangeable offering.

The second issue, is digital music providers still do not know exactly how to price and bundle music. Do companies set a standard price for all goods? Or allow market economics to determine them (Penenberg, 2005)?

Thirdly, models of mass customisation might prove too confusing for some consumers. As Marketer Joseph Pine puts it, mass customisation can create ‘mass confusion’, especially for older generations who are not accustomed to the rapid advancement of technology and the complexity of the model. This is a weakness of the mass customisation model (Piller, 2005).

Lastly, with restrictions placed on music sales by copyright and licensing deals, and with the apprehension of record labels to do as Don Taspcott suggests in WIkinomics, and give up intellectual property controls, businesses may still lack complete authorisation to offer products and services in a way that suits consumers (Tapscott, 2006).

Conclusion

It has been discussed that neither music subscription services nor a la carte music services are a sole way forward in their own regard as they both fail to give the fragmented music consumer market freedom and choice. The disjointed nature of the music industry and shifting consumption patters make consumer behaviour nearly impossible to predict. However, a model of mass customisation can provide a music service with a distinct competitive advantage by offering consumers value along with premium tailored services. Moving into the future, it is unclear what changes may occur in music consumption. However, if a business can model themselves in a mass customised way, with networks of loosely tied and flexible business unit, they will be able to adapt with the market, technology and with consumers.

Bibliography

Books

British Phonographic Industries (2007) Statistical Handbook, London: BPI.

Jennings, D (2007) Net Blogs and Rock ‘n’ Roll, London: Nicholas Brealey Publishing.

Kusek, D and Leonhard, G (2005) The Future of Music, Boston: Berklee Press.

Howkins, J (2001) The Creative Economy: How People Make Money From Ideas, London: Penguin Books.

Robert, M., (1995). Product Innovation Strategy Pure and Simple. New York, Mcgraw-Hill Professional Publishing.

Tapscott, D., and Williams, A., (2006). Wikinomics: How Mass Collaboration Changes Everything. London: Penguin Group.

Journals & Articles

BBC News, (2005). Music Buyers are Growing Older. BBC [online] 2 August. Available from: http://news.bbc.co.uk/1/hi/entertainment/music/4738181.stm. [Access 10 March 2008].

BPI Report, (2007). BPI Press Release, 10 July. BPI [online]. Available from: http://www.ifpi.org/content/library/BPI-first-half-07.pdf. [Accessed 19 March 2008].

Burrows, P., (2007). Stars Are Aligning for Music Subscription Services. Business Week [online] 6 December. Available from: http://www.businessweek.com/magazine/content/07_51/b4063066339977.htm. [Accessed 10 March 2008].

Card, D., (2007). Amazon Digital Music Store Beta - First Take. Jupiter Research Analysts Weblog [online] 25 September. Available from: http://weblogs.jupiterresearch.com/analysts/card/archives/2007/09/amazon_launches.html. [Accessed 22 March 2008].

Click Noise, (2007). Digital Music Futures and the Independent Music Industry. Word Press Development Blog [online] 1 February. Available from: http://clicknoise.net/digital-music-futures-and-the-independent-music-industry/. [Accessed 19 March 2006].

Gruber, F., (2006). Subscription Music Services Compared. Tech Crunch [online]. Available from: http://www.techcrunch.com/2006/04/07/lets-buy-some-music-part-1/. [Accessed 15 March 2008].

IFPI, (2007). Digital Music Report 2007. IFPI [online]. Available from: http://www.ifpi.org/content/library/digital-music-report-2007.pdf. [Accessed 15 March 2008].

IFPI, (2008). Digital Music Report 2007 – Report. IFPI [online]. Available from: http://www.ifpi.org/content/library/DMR2008-summary.pdf. [Accessed 15 March 2008].

Kearns, J., (2008). The Vinyl Countdown. Time Out London 20-26 March Issue 1961. London: Time Out Magazine Limited.

Mininni, T., (2007). Letting Consumers Design their Own Experiences: Case for the Mass Customisation Model. Brand Channel [online]. Available from: http://www.brandchannel.com/papers_review.asp?sp_id=1336 [Accessed 15 March 2008].

Mulligan, M., (2007). EU Goes After Apple and the Labels…Again… Jupiter Research Analyst Weblogs [online]. Available from: http://weblogs.jupiterresearch.com/analysts/mulligan/archives/2007/09/eu_goes_after_a.html. [Accessed 10 March 2008].

Nasdaq: Dell, (2008). Dell Financial Statements. Google Finance [online]. Available from: http://finance.google.com/finance?fstype=ii&q=NASDAQ:DELL. [Accessed 22 March 2008].

Orlowski, A., (2007). Apple, Tesco ‘most to blame’ for music biz crisis. The Register [online]. Available http://www.theregister.co.uk/2007/10/19/vrs_value_gap_report/. [Accessed 5 March 2008].

Pennenberg, A., (2008). The Right Price for Digital Music. Slate [online] 5 December. Available from: http://www.slate.com/id/2131573/. [Accessed 23 March 2008].

Piller, F., Schubert, P., Koch, M., and Möslein, K. (2005). Overcoming mass confusion: Collaborative customer co-design in online communities. Journal of Computer-Mediated Communication, 10(4), article 8 [online]. Available from: http://jcmc.indiana.edu/vol10/issue4/piller.html. [Accessed 19 March 2008].

Resnikoff, P., (2007). Resnikoff’s Parting Shot: DRM Misunderstood. Digital Music News [online] 2 April. Available from: http://www.digitalmusicnews.com/stories/040107parting/?searchterm=iTunes%20better%20quality. [Accessed 15 March 2008].

Smith, T., (2005). Buyers Said to Favour A La Carte Music in 2005. The Register [online] 14 February. Available from: http://www.theregister.co.uk/2005/02/14/music_a_la_carte_vs_subs/. [Accessed 10 March 2008].

Ramadge, A., and Schliebs, M., (2008). Nine Inch Nails make $1.6m on free album. New.com.au [online]. Available from: http://www.news.com.au/technology/story/0,25642,23390248-5014239,00.html. [Accessed 22 March 2008].

Vance, A., (2005). Why Napster Will Be a Fully Integrated Flop. The Registar [online] 4 February. Available from: http://www.theregister.co.uk/2005/02/04/napster_go_away/. [Accessed 10 March 2008].

Websites

BPI Online, (2008). British Phonographic Industry [online]. Available from: http://www.bpi.co.uk/index.asp?Page=piracy/content_file_306.shtml. [Accessed 18 March 2008].

Dell, (2008). Direct Model. Dell [online]. Availabe from: http://www.dell.com/content/topics/global.aspx/corp/background/en/directmodel?c=us&l=en&s=corp. [Accessed 23 March 2008].

Ghost, (2008). Nine Inch Nails [online]. Available from: http://ghosts.nin.com/main/order_options. [Accessed 19 March 2008].

Itunes, (2008). Itunes UK [online]. Available from: www.itunes.co.uk. [Accessed 10 March 2008].

Music Station, (2008).

Omnifone wins Best Mobile Music Service Award for MusicStation at Global Mobile Awards. Omnifone Ltd [online].

Napster, (2008). Napster LLC [online]. Available from: http://www.napster.co.uk/more_about_napster_light.html. [Accessed 10 March 2008].

Pro Music, (2008). Worldwide directory of Authorised Digital Music Services. Pro Music Inc. [online]. Available from: http://www.pro-music.org/musiconline/tracker-region-europe.htm. [Accessed 22 March 2008].

Other

Choice. (2008). The American Heritage® Dictionary of the English Language, Fourth Edition [online]. Available from: http://dictionary.reference.com/browse/choice. [Accessed March 22, 2008].

Freedom. (2008.). Dictionary.com Unabridged (v 1.1). Available from: http://dictionary.reference.com/browse/freedom. [Accessed March 24, 2008].

Blog Article Feb 2009 Trademark gets the last keyword on the Internet

Brand diversion on the Internet is where a potential customer intends to go to your company’s site but is diverted to another site. This diversion may be complimentary to your business or it may be damaging to it. It may be complimentary if for example your products or services are also offered at the accessed site. It would be damaging where the potential customer is diverted to a dubious industry such as pornography. It would also be damaging where the customer is diverted to a competitor’s site, is confused and transacts business with your competitor thinking the site is associated with you or your brand. Competing companies often use hidden trademarks as meta tags, keywords or links to position themselves at the top of search engines. The main argument used to refute allegations of brand infringement by supporters of brand diversion is that there is no customer confusion since the text is hidden. The uncertainty in this area of Internet law may finally be resolved. In December 2008 the worlds largest flower delivery firm Interflora sued Marks and Spencer at the High Court in London for sponsoring the word “Interflora” as a Google AdWords keyword. Interflora contends that such “use” by Marks and Spencer is a breach of the Trade Mark Act 1994. This case could finally resolve the issue of the use of hidden trademarks on the Internet by non trademark owners.