In an industry first, the New Zealand record industry has signed licensing contracts with five local companies allowing them to lease out MP3 music files.
MP3 technology, which uses MPEG level 3 compression technology to achieve an unprecedented 12:1 audio compression ratio, is causing widespread concern in the record industry because the files are small enough to be easily uploaded to and downloaded from the Internet. Record companies fear an outbreak of piracy, as people place tracks on the Internet for download.
However, the companies that have been licensed to use MP3 files in New Zealand are not taking the files from the Net. They are compiling music databases on hard drives and CD-Roms and are paying royalties to PPNZ (Phonographic Performance New Zealand), the collection arm of the Record Industry Association of New Zealand (RIANZ), which represents the major international record companies.
One licence-holder, Auckland-based Computer Music Systems (CMS), has amassed a library of more than 6000 tracks and is leasing compilations to hotels and bars for use as background music. CMS customer De Bretts Bar in central Auckland now has all its background music running from a PC attached to a stereo system.
RIANZ CEO Terence O'Neill-Joyce says the industry does not have a problem with MP3 files in themselves, rather what people do with them. "With companies such as CMS we have a proper agreement in place where our rights are recognised and remuneration for those rights is redistributed to the owners — the record companies that have invested in the recordings. However, as far as the Internet is concerned — uploading on to the Net and offering MP3 files —nobody in New Zealand has been licensed to do that. If they do they are in breach of the Copyright Act."
O'Neill-Joyce says he has been aware of New Zealand sites illegally offering MP3 files in the past but would not say what RIANZ has done about it, if anything. However, he says RIANZ is prepared to take legal action. In the meantime he regards education as the first line of defence and is talking to Internet service providers.
"They can put their users on notice that if they download or upload music it's illegal. This is specifically if they are dealing with music from our members' repertoire. One person I spoke to was very cooperative but he was putting up his own music, which is perfectly legal."
O'Neill-Joyce says the situation is made more complex by the boundary-less nature of the Internet.
"MP3 files can be put up in Ecuador and downloaded in Waipukurau and vice-versa. We need a system in place for reciprocal licensing agreements with different territories so if someone downloads in England, for example, the English collection society would collect the royalty."
Anthony Healey, legal counsel for the Australasian Performing Rights Association, which administers public performance rights on behalf of song writers, says APRA has been approached by a number of sites that want to be licensed.
APRA is also working with its US counterpart, BMI (Broadcast Music Industry), to monitor Web sites. "They are basically looking into what Web sites in New Zealand and Australia have these music files attached to them," says Healey. "Once identifying information is received by us we will look at approaching those sites to inform them about the legal situation."