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Issue Date: Vol. 50, No. 7, July 2010, Posted On: 6/15/2010


AMI Entertainment, RIAA And FBI Combat Illegal Music Copying For Jukebox Play


Marcus Webb
AMI Entertainment Network Inc., AMI, Rowe, Recording Industry Association of America, Ecast, TouchTunes, jukebox, coin machine business, vending business, jukebox operator, digital jukebox, illegal jukebox, illegal digital music, copyright infringement, jukebox investigation, ASCAP, performing rights organization, Jukebox License Office, Amusement and Music Operators Association, AMOA, Russ Mawdsley, American Amusement Machine Association, John Margold, Mike Maas

WASHINGTON -- AMI Entertainment Network Inc., working with the Recording Industry Association of America, is continuing a three-year investigation of potential criminal cases of copyright infringement. The alleged infringers are bringing unwelcome and illegitimate competition to the jukebox industry, investigators said. Results of the investigation have been turned over the Federal Bureau of Investigation for further action.

Heading the investigation is Bob Fay, AMI's director of government relations and international sales manager. According to Fay, at least half a dozen operators or other business entities have been targeted in the ongoing investigation. These operators have allegedly copied unlicensed music onto computer hard drives that are installed in nonstandard digital jukeboxes being placed in locations nationwide. Music sources could range from Internet downloads to simply making digital copies of CD music tracks.

In August 2009, deputies from the federal government's Southern California High Tech Task Force executed approximately 25 search warrants in the Orange County area. The taskforce is comprised of officers from the FBI and U.S. Immigration and Customs Enforcement, as well as other federal and state agencies.

Under the taskforce's direction, 25 allegedly illegal jukeboxes were seized by southern California law enforcement officers deputized by federal authorities to participate in the investigation. The jukes reportedly contained hard drives that stored music copied in violation of copyright law. Computers and business records were also seized.

The federal Assistant U.S. Attorney's Office is reviewing the evidence and evaluating possible charges. Additional raids are believed likely in the future; investigations are still under way in New York, Michigan, Los Angeles, Puerto Rico and other jurisdictions, Fay said. Some alleged copyright infringers in these other jurisdictions have received cease and desist letters; warrants for new searches and seizures are believed to be coming soon.

In cases that fit the fact pattern described here, an operator could be indicted by federal prosecutors and found guilty of criminal copyright violation. An operator found guilty of such a criminal offense would face possible imprisonment as well as punitive fines.

An operator who sold music in violation of copyright could also be sued civilly by the offended parties. If found guilty, the offender could be ordered to pay considerable fines to the plaintiff.

The offended parties in such a suit would include recording artists and music labels. AMI's Fay said the music industry's national trade association, the RIAA, has issued cease-and-desist letters to some operators of these allegedly unauthorized jukes.

According to Fay, manufacturers, distributors and operators of legitimate digital jukeboxes are losing sales and locations.

Fay is coordinating the investigation for the entire jukebox industry. He is a former FBI agent with considerable experience in white-collar crime and the enforcement of copyright law. Ecast Inc. and TouchTunes Interactive Networks have provided some support for the effort, Fay said.

Many of the leads for investigations come from legitimate operators around the U.S., Fay told VENDING TIMES. These operators have reported unauthorized use of digital music by competitors who seek to gain an unfair advantage in the market. The copyright violators can offer locations a better split of jukebox income because they are not paying copyright fees for the music.

The Amusement and Music Operators Association and American Amusement Machine Association have been advised of the FBI investigations and the legal issues involved.

According to Fay, in April 2008, the then-president of AMOA, Russ Mawdsley of Russell Hall (Holyoke, MA), attended a meeting on this topic at FBI headquarters in Washington. Fay, AMI president Mike Maas and an AAMA official were also present.

In addition, Fay said he and AMI's senior vice-president of sales and marketing John Margold recently briefed eight operators, most from New York City, who have lost locations as a result of unfair competition brought on by unauthorized jukebox music. Fay estimated that up to a dozen NYC operators have lost locations.

He said some operators and locations "hide behind" licenses obtained from the Jukebox Licensing Office or ASCAP, claiming ignorance of the limited scope of rights conferred. This dodge has prompted Fay to refer to the crime as "digital fraud."

In fact, the JLO license is a public performance right for CD or 45-rpm music, not a mechanical permission for reproduction of music (digital or otherwise). Similarly, rights conferred on locations by ASCAP licenses are for public performances. ASCAP licenses do not include the right to copy and store digital content, Fay pointed out.

Fay said ASCAP will revise the language used in its licensing agreements to clarify the scope of the rights they grant.

Operators who suspect an illegitimate competitor may be guilty of copyright violation can contact Fay at (847) 366-0804 or email rfay@amientertainment.com.


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