RECORD INDUSTRY WORRIES ON IP MULTICAST

UNCLAS TOKYO 002031

SIPDIS

STATE FOR EAP/J, EAP/EP, EB/TPP/MTA/IP
EAP/J PLEASE PASS TO USTR Meyers, USPTO Keplinger, LOC
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SIPDIS

E.O. 12958: N/A
TAGS: KIPR ECON JP
SUBJECT: RECORD INDUSTRY WORRIES ON IP MULTICAST
COPYRIGHTS

REF: Ereshefsky e-mails 4/13 and 4/14/06


1. This is an action request please see paragraph 8.


2. SUMMARY: Three Japanese government working groups
are addressing copyright issues for IP multicasting and
are leaning towards adopting a change that would probably
eliminate the ability of the U.S. recording industry to
retain its rights in the re-transmission of programs via
multicasting, by treating multicasting the same as
broadcasting and cable. The multicasting providers (see
definition for IP multicast at end of cable) are pushing
for this as a way to remove what they say is the onerous
burden of obtaining copyrights clearances for their
programs. Industry tells us that the Cabinet's
Intellectual Property Strategy Headquarters (IPSH) is
aggressively pushing for this change because the telecoms
companies have convinced them that the change is
necessary to open the way for IP (Internet Protocol)
broadcasting, part of the much-anticipated convergence of
communications and the internet. Although this problem
may not cause big losses for the recording industry in
the short term because multicasting is still small and
they do not make much under current broadcasting and
cable rules, there is the potential for losing control
over digital copies in the future. As changes are due to
be drafted by May 30, USG must decide quickly if and how
it wishes to respond.
End Summary


3. The Recording Industry Association of Japan (RIAJ)
explained in a meeting on April 12 that the change that
IPSH, Agency for Cultural Affairs (ACA aka Bunkacho),and
Ministry of Communications and Internal Affairs (MIC)
working groups are studying would permit the same
treatment under copyright law for "interactive
transmission" including simulcast, webcast, and IP
multicasting, as that which currently applies to
broadcasting (terrestrial or satellite TV, radio) and
cablecast. Whereas sound-recordings used in multicasting
now have exclusive rights over (a) re-transmission of
broadcast, (b) use of records in original programs, and
(c) ephemeral recordings, these would be reduced to only
a right of remuneration, paid after transmission for (b).
However, RIAJ pointed out, only Japanese domestic
recordings, and not the U.S. repetoire, would be eligible
for the remuneration right because the United States is
not a party to the Rome Convention.


4. RIAJ has been defending the recording industry
position in meetings with the working groups, arguing
that the problem can be resolved without resorting to a
change in the copyright law. In order to address the
complaints about a cumbersome rights clearance process
for the multicasting companies (2 NTT subsidiaries, KDDI,
and BB Yahoo) RIAJ is rushing to launch a collective
licensing system in May which will include all kinds of
performers, musicians, and actors. However, RIAJ says
that it is not optimistic about turning the proposal
around because IPSH and the broadcasters responded in
meetings that even the new collective licensing system
will not be able to cover all domestic and international
repertoire. RIAJ is also studying whether or how the
change would be in violation of international treaties.


5. At this point, the Agency for Cultural Affairs told
RIAJ, there are still three options on the table for the
treatment of recordings, of which only the first option
appears to be acceptable to U.S. industry:

(1) Retaining the current system for multicasting which
recognizes the "right of making available", (which the
Japanese call the "right of making transmittable") using
the new collective licensing system.

(2) Change from the current system for multicasting to
the cable casting rules, but with no rights for re-
transmission.

(3) Change to the cablecasting rules but retaining the
right of remuneration for re-transmission (which U.S.
industry would not be able to claim.)


6. RIAJ said that the cable industry, which wants to
ward off competition from multicasting, supports their
position on the issue, but the recording industry is
otherwise isolated because other rights holders, such as
authors, will retain their rights. RIAJ felt that IPSH
and MIC have been pressured by broadcasters and telecoms
companies and have decided it is more important to
facilitate development of new types of broadcasting.
ACA's position is neutral because it is more attuned to
the concerns of the rights holders. This whole debate is
arising now because the GOJ has decided to shift all
terrestial TV to digital TV by 2011 and, in order to
resolve reception problems in some areas, to promote re-
transmission of digital TV over IP multicasting over DSL
or FTTH (optical fiber-to-the-home).


7. It is difficult for the Embassy to assess what impact
the proposed change would have on the recording industry
and what losses it might suffer. Under current Japanese
law, the U.S. recording industry has full rights in
multicasting -- which is not yet very widespread -- but
gets little or nothing from broadcasts or cablecasts.
Moreover, currently IP multicasting uses set-top boxes
which do not allow for digital copying. However, this is
expected to change in the near future and RIAJ fears it
will become easy for IP multicast providers to launch
sound-recording streaming which will not be covered by
exclusive rights. This would enable massive digital
piracy ("stream ripping") and leave open the ability to
make massive "ephemeral recordings" (a form of temporary
copy that is kept in the webcaster's server to transmit
sound recordings.)


8. ACA is scheduled to draft its recommendations by May

30. After a report is drafted in June there will be a
call for public comments mid-June to mid-July. The plan
is have a draft law to submit to the Diet in the Fall.
Embassy will be meeting with ACA shortly to find out more
about the proposed changes in the law. Embassy would
like to discuss the issue with the three
ministries/agencies involved (IPSH, MIC, Bunkacho) as
soon as possible and would appreciate comments, analysis,
and talking points from interested USG agencies on this
issue.


9. Note on IP Multicasting: IP multicasting differs
from the usual point-to-point internet streaming in which
the ISP provides service to individual users and requires
huge bandwidths. IP Multicast is a bandwidth-conserving
technology that reduces traffic by simultaneously
delivering a single stream of information to thousands of
recipients in a local or wide-area network

SCHIEFFER