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have done a bit more research and also have a few
other links for you:

1) http://www.afterdawn.com/news/archive/3258.cfm -
8/29/02 article re: a line that was taken out of the
Thomson license. (The article they are talking about
is found at:
http://slashdot.org/articles/01/06/09/1728234.shtml
complete with a TON of comments.)
This will actually help us and I will provide you with
something for the site tomorrow.

2) Article regarding today’s Supreme Court decision on
copyrighting and music files -
http://customwire.ap.org/dynamic/stories/S/SCOTUS_FILE_SHARING?SITE=FLDAY&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2005-06-27-10-35-02

3) The actual Supreme Court Decision (there is some
pertinent information that helps us – I will include
that with what I send tomorrow) -
http://wid.ap.org/documents/scotus/050627grokster.pdf

4) A website that MIGHT allow us to get actual copies
of Thomson licenses with a subscription:
http://www.royaltystat.com/

5) Press Release re: Thomson’s 100th Licensee – it
lists many of their licensees:
http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/04-18-2001/0001471544&EDATE=

6) This is the closest answer I can find on the
revenues generated for mp3 patents:
http://answers.google.com/answers/threadview?id=1059

7) Here’s the reason that Thomson doesn’t get involved
in any of the Napster type copyright lawsuits with the
music industry:
http://www.musicmatch.com/info/company/press/releases/?year=1999&release=5
Article on MP3 Standards and Fraunhaufer Patents -
http://www.cptech.org/ip/business/software/audio.html
(scroll down to the bottom third of the page where it
states:

“Many people think that the MP3 standard is free and
open, and that the ISO reference source code is also.
But in the beginning of September 98, Fraunhofer
Institute, largely involved in the development of
MPEG-audio compression, has send a letter to several
developers of “free” ISO-source based encoders. In
this letter they make it very clear that all
developers and publishers of MPEG-audio layer 3 (MP3)
encoders based on ISO-source must pay a license fee to
Fraunhofer.”

This article even discusses using the OGG alternative!

See also http://www.mp3-tech.org/patents.html
and http://www.oreilly.com/catalog/mp3/ (unfortunately,
I was not able to access the chapter on the “complex
legal issues surrounding MP3 files” online without
paying a subscription fee — it might be worth it to
do so — check out chapters 7 & 8 in the table of
contents)

–

Now, as I see it, the entire controversy is over the
ommission of the following clause from the Thomson
website:

“Note: No license is needed for private, non-commercial
activities (e.g., home entertainment, receiving
broadcasts and creating a personal music library), not
generating revenue or other consideration of any kind
or for entities with an annual gross revenue less than
US$ 100 000.00.”

What people are not realizing is that this paragraph is
connected with the word “OR” — not with the word
“AND”. It can actually be written as 3 separate
paragraphs:

1) No license is needed for private, non-commercial
activities (e.g., home entertainment, receiving
broadcasts and creating a personal music library.

2) No license is needed [for distribution if the person
or entity is] not generating revenue or other
consideration of any kind.

3) No license is needed for entities with an annual
gross revenue less than US $100,000.

Now, let me explain what each of these three
connotations mean from a legal perspective.

#1 would be for strictly personal use with absolutely
no commercial involvement. In this case, no license
is needed.

#2 implies a commercial use. No license would be
required if the person or entity distributing the mp3
file generates absolutely no income whatsoever from
their business. They would also not be required to
have a license if they receive “no consideration of
any kind”. That is where the confusion lies, in my
opinion. The term “consideration” is a legal term.
To define it for the layman, “consideration” is any
benefit received for a specific action. In terms of
mp3 files either being streamed on a website or
downloaded from a website, examples of “consideration”
could be:

* giving away an mp3 file in exchange for a person’s
email address — the email address is the
consideration
* giving away an mp3 file as a bonus for the purchase
of another product — the revenue derived from the
sale of the other product is the consideration
* streaming an mp3 file to promote a product — the
consideration is both the person reading the sales
letter as well as the potential purchase of the
product

I could go on and on with examples, but I am sure that
you get the point. So, even if a website does not
have a gross revenue of $100,000, they must still
obtain a license if they receive ANY benefit from the
distribution or use of the mp3 file.

#3 also implies a commercial use. The confusion with
this connotation or interpretation lies with the term
“entity”. Again, an “entity” has a specific legal
meaning. This meaning goes beyond that of just a
corporation, an LLC, or other organized form. If a
person is acting as a d/b/a (for example, John Doe
d/b/a mywebsite.com), they are an “entity” for legal
purposes. In fact, most (if not all) of the states in
the United States would require a ficticious name
filing for operating a website as a sole proprietor
under their business (or website) name.

In fact, under the American Heritage Dictionary (see
http://education.yahoo.com/reference/dictionary/entry?id=e0162400
), it states:

en·ti·ty
NOUN:
pl. en·ti·ties
Something that exists as a particular and discrete
unit: Persons and corporations are equivalent entities
under the law.

So, the argument that most websites are not actual
companies but are run by individual persons does not
stop the licensing requirement either.

The issue of the $100,000 annual gross revenue of the
“entity” is actually a moot point because of #2. If
there is ANY revenue or ANY consideration (benefit) of
any kind, then the person or entity must first obtain a
license.

If you look at the Questions & Answers section of
mp3licensing.com found at:

http://mp3licensing.com/help/enduser.html

it states:

“Do I need a license to stream mp3/mp3PRO encoded
content over the Internet?
Yes. A license is needed for commercial (i.e.,
revenue-generating) use of mp3/mp3PRO in broadcast
systems (terrestrial, satellite, cable and/or other
distribution channels), streaming applications (via
Internet, intranets and/or other networks), other
content distribution systems (pay-audio or
audio-on-demand applications and the like) or for use
of mp3/mp3PRO on physical media (compact discs,
digital versatile discs, semiconductor chips, hard
drives, memory cards and the like).

“However, no license is needed for private,
non-commercial activities (e.g., home-entertainment,
receiving broadcasts and creating a personal music
library), not generating revenue or other
consideration of any kind or for entities with an
annual gross revenue less than US$ 100 000.00.”

They also state, on this same page:

“Do I need a license to distribute mp3/mp3PRO encoded
content?
Yes. A license is needed for commercial (i.e.,
revenue-generating) use of mp3/mp3PRO in broadcast
systems (terrestrial, satellite, cable and/or other
distribution channels), streaming applications (via
Internet, intranets and/or other networks), other
content distribution systems (pay-audio or
audio-on-demand applications and the like) or for use
of mp3/mp3PRO on physical media (compact discs,
digital versatile discs, semiconductor chips, hard
drives, memory cards and the like).

“However, no license is needed for private,
non-commercial activities (e.g., home-entertainment,
receiving broadcasts and creating a personal music
library), not generating revenue or other
consideration of any kind or for entities with an
annual gross revenue less than US$ 100 000.00.”

So if there is any confusion on this issue, hopefully
the above explanation as well as the information on
the Q&A page will help clarify things for the Internet
Marketing Community.

The question of whether non-profit organizations are
required to obtain a license is not addressed by
Thomson. At this time, I am attempting to obtain a
written letter on this issue, but they do not often
issue such blanket statements but rather, ask for it
to be reviewed on a case-by-case basis by emailing
info@mp3licensing.com.

We need to provide this information at the TOP of the
mp3 is not free website IMMEDIATELY so that no one
takes the advice of the non-lawyers out there who are
hung up on only the $100,000 statement.

If you have any questions, please let me know. You may
use this discussion exactly as written. If you intend
to make any changes, please provide me with the copy
prior to posting on the website.

Thank you.

This is great information, Jim. My blog post addresses one point, which is the idea that any time some company decides to patent some (now popularized) technology, the scare is on. And that large companies will muscle out the patent threats with legal weight or the creation of some new competing technology.

(According to one of my members, Mac/Apple, the makers of iPod and iTunes and currently riding the recent Tsunami caused by the Podcasting craze, have started to integrate MP4 in their software.)

A few things Jim also made clear is that the MP# licensing site and its licensing information is old. So this is not new information. My friend Armand Morin, and a few other big marketers, tried desperately to find any lawsuits or public information on the MP3 industry crackdown … to no avail. So the million-dollar question is, does Thomson/Faunhofer care about small fries? Even over $100,000 in gross revenue?

My opinion is, simply, they don’t.

Jason, that’s why I prefer “Quebecker” rather than “French Canadian.” … Gotta love ‘em Hawai’ians.

Aloha Michel!

>> Jason, that’s why I prefer “Quebecker” rather than “French Canadian.” … Gotta love ‘em Hawai’ians. > So the million-dollar question is, does Thomson/Faunhofer care about small fries? <<

I agree, they probably don’t. And as prolific as MP3s are, I think they would have a hard time in court. They would probably go after encoder companies, and the like.

Aloha,

Jason