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RIAA Finds No 'Current' Wrongdoing On NSM Jukeboxes

Posted On: 7/22/2011

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jukebox, juke box, Recording Industry Association of America, RIAA, NSM Music, music piracy, music licensing, jukebox operator, jukebox business, coin machine business, coin-op news, Phonographic Performance License, TouchTunes Interactive Networks, AMI Entertainment Network Inc., Ecast Inc., Amusement Music Owners Association of New York, Ken Goldberg, PLK Vending, Donovan Fremin, Amusement and Music Operators Association, AMOA, Cary Sherman, Bradley Buckles, Carlos Linares Jr.

Operators Continue To Seek Greater Cooperation With
Recording Industry To Fight Music Piracy

WASHINGTON -- Following an investigation brought on by a complaint from several jukebox operators representing different trade groups, the Recording Industry Association of America has reportedly found that NSM Music has approval from record labels to conduct a pilot program consisting of 25 digital downloading machines. An industry official close to the matter informed VT that several operators have been discussing the case with the RIAA for the past two months.

In late December, NSM Music Group Ltd., parent company of Illinois-based NSM Music Inc., sent shockwaves through the American jukebox community when it announced plans to begin marketing and operating its own digital jukebox music platform in the U.S. In addition to vendors, NSM's new business model sells music services and a new jukebox model directly to locations that want to self-operate. | SEE STORY

Previously, NSM's American jukebox business was limited to hardware and support; it provided jukeboxes for Ecast's music network, and still does. NSM said its own network serving the U.S. has been up and running for testing purposes, and would officially go live in the first quarter of this year. NSM is offering the Icon 2, a wall-mounting model, in its direct sales program.

NSM is quick to point out that it was among the first companies to obtain licensing agreements with major record labels that allow performances of music on jukeboxes in Great Britain, on the European continent and in the Middle East. (However, Performing Rights Society for Music, which represents the rights of the creators or publishers of musical works in the UK, recently challenged NSM's licensing status.) But the company, headquartered in England, has been silent about its music activity in the U.S.

The recent complaint brought to the RIAA involved a location-owned NSM jukebox in Port Jervis, NY. Some of the music on that jukebox was exclusive only to TouchTunes jukeboxes, sources told VT, creating some suspicion about its music source.

On May 23, Donovan Fremin, president of the Amusement and Music Operators Association, the national organization of jukebox operators, and Ken Goldberg, president of the Amusement and Music Owners Association of New York, met with high-ranking RIAA officials in the nation's capital to discuss NSM and the greater problem of music piracy.

Fremin is part of Delta Music Inc. from Thibodaux, LA, and Goldberg is the owner of New York City's PLK Vending. The two jukebox operators met with Cary Sherman, Bradley Buckles and Carlos Linares Jr., who respectively are the RIAA's president, executive vice-president of antipiracy and vice-president.

Following the meeting, RIAA sent a letter to NSM asking the company to address grievances that it might be dealing in jukeboxes containing unauthorized sound recordings. Through its lawyers, NSM told the RIAA that the jukeboxes it had recently sold directly to locations are part of a 25-unit trial, and it is in the process of negotiating licenses with the labels. The RIAA confirmed NSM's authorization for the pilot program with label officials.

Separately, the RIAA said it will continue to work with the jukebox industry and law-enforcement agencies to combat illegally copied music used for jukebox play. However, criminal investigations into jukebox bootlegging are prioritized at the discretion of law-enforcement officials. Officers who were working on a major jukebox investigation in California have reportedly been reassigned to other cases.

Despite the lack of law-enforcement concern and a steady emergence of direct-sales businesses, a vocal group of operators continues to look after their investment in a 100-year-old industry they built. VENDING TIMES estimates that jukebox operators will pay more than $100 million in fees this year to connect to the three jukebox networks. However, the networks are responsible for paying royalties based on total networkwide earnings of jukeboxes.

"The latest response we received from the RIAA about its willingness to undertake enforcement and legal measures against NSM, along with any other violators of copyrighted music and music rights ownership, falls far short of what we were told during our face-to-face talks at the RIAA," AMOA-NY executive director Danny Frank said.

Frank argues that responsible music operators playing by the rules are being put into an "unfair, competitive disadvantage" because the recording industry is unable to enforce the law, which unintentionally "gives exemptions and special considerations to people and organizations who do not pay their fair share."

As for its position on NSM, the RIAA said it does not "currently" recommend legal action because "good faith licensing discussions are in progress" between the jukebox company and labels.

"Since the current system of copyright protections dates back to the late 1970s when the RIAA and performance rights organizations -- ASCAP, BMI and SESAC --were granted legal, recognized guardian status -- perhaps this system has become obsolete and it is time to look for a different approach so that the economic interests of operators are properly protected," Frank said.

In a separate development in the larger consumer sphere, the entertainment industry is taking a more aggressive approach to fighting copyright infringement in the Internet age. The RIAA and the Motion Picture Association of America are among the major trade associations for music and movies, along with independent record companies and filmmakers, that struck a deal with Internet providers, including AT&T, Cablevision, Comcast Verizon and Time Warner Cable, to fight online piracy. In early July, the ISPs agreed to a uniform procedure for notifying customers about repeated instances of digital copyright infringement. The graduated-response system issues a series of warnings to customers believed to be breaking copyrights, including the suspension of service. | SEE NY TIMES STORY

In the world of coin-op, however, such Internet tools are irrelevant, unless a jukebox loaded with unauthorized music is online. In most cases, alleged illegal boxes use iPods and other MP3 players, or a hard drive loaded with music copied from CDs, as their music source. And these bootleg boxes operate offline, making them undetectable by cyber antipiracy software.

Founded in 1952, the Recording Industry Association of America is a trust that represents recording industry distributors in the United States. Members consist of record labels and distributors, which the RIAA says "create, manufacture and/or distribute approximately 85% of all legitimate sound recordings produced and sold in the United States."

Performance rights organizations, on the other hand, provide intermediary functions. Their main purpose is royalty collection by copyright holders from parties who wish to use copyrighted works publicly, like vending operators who place jukeboxes in bars. The Jukebox License Agreement allows operators to pay a blanket fee to cover all public performances of copyrighted music (played on CD or vinyl machines) that is protected by the PROs.

The Amusement Music Owners Association of New York Inc. is a nonprofit group that represents and promotes the interests of businesses that own and install coin-op devices in locations throughout New York State. The national AMOA, headquartered in Chicago, was founded in 1948 to fight the repeal of the jukebox royalty exemption; today it represents the interests of operators involved in all types of amusement vending.

NSM Music was founded in Germany in 1951 and is now headquartered in Leeds, England. It was the first jukebox manufacturer to be awarded the Phonographic Performance License for dubbing and downloading music in Europe. It could possibly become the fourth jukebox music provider in the U.S., joining TouchTunes Interactive Networks, AMI Entertainment Network Inc. and Ecast Inc.