By , August 01, 2011.

The latest darling of the digerati is music service The site has grown to nearly 400,000 monthly active users (despite still being invite-only) and has raised $7.5 million from investors since it launched just two months ago. Along with countless rave reviews in the blogosphere, it has been covered by Billboard, labelled “the cool kids’ Pandora” by CNN, and called “amazing” by the New York Times.

And it is pretty cool, as I’ve discovered after playing around with it in the last couple weeks. It’s great for sharing music — in the real sense of the word, not in the false “file-sharing” sense — with friends and strangers, discovering new music, or simply as a “traditional” internet radio station that you listen to at work or home.

But is it legal? Several people have already asked the question. As with most questions involving copyright, the answer is not easy, as these answers are typically very fact-specific and depend on interpreting laws that lack bright-line distinctions. The answer isn’t made easier by the fact that the team behind has remained tight-lipped for the time being.

For those unfamiliar with the site, Billboard’s article provides a good rundown of how it works.

Whether is legal depends on whether it is licensed to exercise any of the exclusive rights of any copyrighted content.  Recorded music consists of two separate copyrights: a copyright for the underlying musical composition and a copyright for the particular sound recording of the song. Each of these copyrights consist of individual rights — notably, the right to reproduce, the right to distribute, and the right to publicly perform a work.

Public Performance

Streaming a song implicates the public performance right of a musical composition. 1US v. ASCAP, 485 F.Supp.2d 438, 442 (SDNY 2007). Performance Rights Organizations (PROs) — in the US, these include ASCAP, BMI, and SESAC — administer the licensing of public performance rights for nearly all musical compositions — the notable exception being a portion of the catalog of EMI, which recently began administering the public performance rights for “New Media” services itself.

In the past couple weeks, has inked deals with both ASCAP and BMI. That leaves agreements with SESAC and EMI Publishing for the site to be fully covered, though presumably those are in the works or already on the way based on the site’s efforts to become licensed under the other PROs.

Performance rights for sound recordings are a bit trickier. When sound recordings were first given copyright protection, that protection did not include a right to public performance. However, in 1995, Congress added a narrow performance right to sound recordings via a digital audio transmission. 2Digital Performance Right in Sound Recordings Act, Pub. L. No. 104-39, 109 Stat. 336 (Eff. Feb. 1, 1996). It also included provisions for statutory licensing for certain webcasters, provisions that were amended by the DMCA in 1998.

Currently, noninteractive services are eligible for statutory licensing; interactive services — think on-demand streaming services like Spotify — must negotiate directly with copyright owners for public performance licenses. 317 USC § 114(d)(1) and (d)(2).

The Copyright Act defines an “interactive service” as:

one that enables a member of the public to receive a transmission of a program specially created for the recipient, or on request, a transmission of a particular sound recording, whether or not as part of a program, which is selected by or on behalf of the recipient. The ability of individuals to request that particular sound recordings be performed for reception by the public at large, or in the case of a subscription service, by all subscribers of the service, does not make a service interactive, if the programming on each channel of the service does not substantially consist of sound recordings that are performed within 1 hour of the request or at a time designated by either the transmitting entity or the individual making such request. If an entity offers both interactive and noninteractive services (either concurrently or at different times), the noninteractive component shall not be treated as part of an interactive service. 417 USC § 114(j)(7).

Only one case has been faced with the issue of distinguishing between interactive and noninteractive services. In Arista Records v. Launch Media, the Second Circuit considered whether the webcasting service LAUNCHcast was “interactive” within the meaning of the statute. LAUNCHcast allows users to create custom stations by selecting a genre, artist, or song; the service than generated a custom playlist for the user (I’ve never used LAUNCHcast, but from the description, the service sounds like it operates similarly to Pandora). The plaintiffs argued that this type of service is clearly interactive since the stations are “specially created for the recipient.”

The Second Circuit disagreed with this broad reading of the statute’s language. It turned to Congress’s intent for more clarification, and after a thorough examination of the legislative history, said:

In sum, from the SRA to the DMCA, Congress enacted copyright legislation directed at preventing the diminution in record sales through outright piracy of music or new digital media that offered listeners the ability to select music in such a way that they would forego purchasing records.

Armed with a narrower reading of the statute, the court ultimately concluded that LAUNCHcast was not an “interactive” service “because the webcasting service does not provide sufficient control to users such that playlists are so predictable that users will choose to listen to the webcast in lieu of purchasing music, thereby—in the aggregate—diminishing record sales.”

It appears that is operating as a noninteractive service. The music on its system is provided through MediaNet, which also assists with licensing through SoundExchange, the organization in charge with administering statutory licensing of digital performance rights for sound recordings.

For a non-DJing listener, the service does appear to be noninteractive in the legal sense. Aside from selecting a room to listen in, a non-DJ listener has no control over the selection of music. The service doesn’t announce the name of upcoming tracks, nor does it allow tracks to be downloaded. It also limits the number of times tracks from the same artist or album can be played within a certain time frame.

But the service may be considered interactive for those users who are DJ-ing, since they do specify the selection of songs to be played. A service can have both noninteractive and interactive components; for, that may mean that the statutory license covers the streams made to non-DJ listeners while the streams made to DJ-ing users need to be licensed directly with the sound recording copyright owners.

There is evidence that is working on complying with the law in this area, either by negotiating such a license or making sure the service is noninteractive under the statute for DJ-ing users. For example, when a user is the only one in a room DJ-ing, the song is only streamed to room visitors while the DJ can only hear a preview. This prohibits someone from using the service as a purely on-demand streaming service like Spotify.

Is that enough? Unfortunately for, there is no clear answer to that question. The line that divides interactive from noninteractive services is unclear, and I think arguments could be made on either side. For example, this passage from a DMCA conference report points out certain features that would separate an interactive service from a noninteractive one:

[A] service would be interactive if it allowed a small number of individuals to request that sound recordings be performed in a program specially created for that group and not available to any individuals outside of that group. In contrast, a service would not be interactive if it merely transmitted to a large number of recipients of the service’s transmissions a program consisting of sound recordings requested by a small number of those listeners. 5H.R. Conf. Rep. No. 105-797, at 87-88 (1998). seems to fit more in the latter category than the former — although it does allow users to create “private” rooms. A “private” room might be considered specially created for a small group of people and not available to individuals outside that group — or it might not, because setting a room as “private” doesn’t bar anyone from joining the room, it just prevents that room from being included in the list of rooms that users see on the site; anyone can join the room if they know the link to it.

Bottom line, the interactive/noninteractive distinction is one that can only be fully determined in court. In 2000, the Digital Media Association (DiMA) petitioned the Copyright Office to clarify this distinction via regulation, but the Copyright Office declined. In its response to the petition, the Office said, “Such a determination must be made on a case-by-case basis after the development of a full evidentiary record in accordance with the standards and precepts already set forth in the statute,” and concluded, “In light of the rapidly changing business models emerging in today’s digital marketplace, no rule can accurately draw the line demarcating the limits between an interactive service and a noninteractive service.”

Reproduction and Distribution’s catalog of over 11 million songs is provided through MediaNet, and any reproduction or distribution of that content is covered by its agreement with the service. As per that agreement, doesn’t allow users to download any of the songs — and in fact appears to be taking affirmative steps to ensure that continues to be true.

The site also allows users to upload songs to the service. The DMCA shields service providers from any infringement that arises by reason of storage at the direction of a user. 617 USC § 512(c). If a user uploads someone else’s song without permission, must remove it if it has knowledge that it is infringing or receives a takedown notice from the copyright owner.

This feature doesn’t expose to much risk of liability. Any song that is uploaded isn’t reproduced or distributed further, since the site doesn’t allow downloading. And any public performance of the composition or recording is likely already covered by the blanket licenses the site has in place.

Bottom Line

A few weeks ago, blocked use of its site from non-US users. Currently, the licenses it does have in place probably extend only to the US. These licenses almost fully cover the site’s use of copyrighted content — may need to negotiate directly with sound recording owners for public performances received by DJing users depending on whether it is considered an interactive webcaster for these users.

What’s encouraging is that the site owners appear to be working on building a legally-compliant music service from the start. Often, copyright critics try to build a false wedge between content and technology companies. But shows that it’s possible for a start-up to build an exciting and innovative service that respects copyright. Such services are exciting because they represent sustainable business models that benefit everyone — creators, entrepreneurs, and consumers.


1 US v. ASCAP, 485 F.Supp.2d 438, 442 (SDNY 2007).
2 Digital Performance Right in Sound Recordings Act, Pub. L. No. 104-39, 109 Stat. 336 (Eff. Feb. 1, 1996).
3 17 USC § 114(d)(1) and (d)(2).
4 17 USC § 114(j)(7).
5 H.R. Conf. Rep. No. 105-797, at 87-88 (1998).
6 17 USC § 512(c).


  1. Perhaps more people would respect copyright if Congress had not made copyright law so horrifyingly complex. It was a mistake to recognize copyrights for sound recordings to begin with.

    • I think it might be important to highlight that what might be legal for them, might not necessarily be legal for their users. Section 512 lays out the D.M.C.A. Safe Harbor provisions and it only seems to be protecting ‘internet service providers’ with special protections from the infringing activities of their users. Nothing granted therein protects the end user from accidental infringement of those uploaded materials that don’t fall within the licensed rights.

      That’s the aspect we should be most concerned about since their audience could be held liable for anywhere between $200-$30,000 under <a href=''section 504 if we innocently assume we’re allowed to listen to a song when as a matter of fact we’re not.

      Don’t think you can be held liable for infringement of a streamed copy due to the fact that it’s being streamed? Chances are you’re probably wrong due to the way computers works. Pretty much everything must be copied into the R.A.M. and possibly cached on the hard drive. The end user doesn’t necessarily have the reproduction rights to do that. Here’s a statement directly from the court’s decision in Mai vs. Peak:

      “[34] Peak argues that this loading of copyrighted software does not constitute a copyright violation because the “copy” created in RAM is not “fixed.” However, by showing that Peak loads the software into the RAM and is then able to view the system error log and diagnose the problem with the computer. MAI has adequately shown that the representation created in the RAM is “sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.”

      Granted, Mai vs. Peak seems to deal with works of a different nature, has been deeply criticized and congress has reworked section 117 to protect against it in certain aspects (I’m not sure how but I think they just added section c to allow for repairs). However the ninth circuit is still using it as a sort of binding precedent in cases like Vernor vs. Autodesk, so the pertinent facts still apply.

      Now the Capitol vs. Thomas-Rasset case you covered last week held Rasset liable for downloading the 24 songs in question (in addition to distributing them) if I recall correctly. This leaves little room for doubt that personal liability is possible for unlicensed downloads.

      I’m not recalling many of the facts of the law as it pertains to phonorecords in particular right now so I feel like I should be reading the Home Audio Recording Act right now. Then again, it might not matter since computers aren’t recording devices according to RIAA vs. Diamond Multimedia and section 101 defines computer programs as “a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result.” which could theoretically encompass all data in a computer.

  2. The complexity of copyright stems from the fact that there are so many components that create the value of copyrighted works.

    Consider sound recordings: some versions of the same song are just more valuable than others, while others are equally valuable to different market segments. Hendrix’s version of “All Along the Watchtower” is a whole different animal than Dylan’s – I like the Hendrix version, but not the Dylan one (in all, I think Dylan is a much better songwriter than a performer). Should the value imparted by a specific performance go unrecognised? That doesn’t make much economic sense.

    Licensing can and should be simplified, but the way to do it isn’t to start pruning property rights indiscriminately – not when they are attatched to a recogniseable value component. Furthermore, people who choose to start content-based businesses are making an autonomous decision and have the same obligation to familiarise themselves with the legal framework as everyone else. It is possible to operate a legitimate business even under the “horrifyingly complex” copyright law of today, but it requires a modicum of good will and dilligence.

  3. Pingback: Article: Is Legal? « Fans

  4. Pingback: The New Era of Virality « Ralph Barbagallo's Self Indulgent Blog

  5. Pingback: Now Licensed | Songtrust