German Copyright Issues Plague Ringtone Providers

Back to Contents of Issue: March 2002

In January, several ringtone providers gathered at the offices of E-Plus in Dusseldorf, Germany, for a second round of testing on their sites. E-Plus is the German subsidiary of KPN Mobile and is scheduled to officially launch its i-mode service this March. As ringtone providers here perform extensive testing on their sites, some are finding that in addition to technical barriers, there are also several legal issues to overcome, particularly those related to copyright infringement.

Whereas Japan has had several years now to formulate a general policy regarding copyrights and ringtones, Europe is still in the very early stages of handling this problem, and there are many gray areas regarding copyright ownership. In Japan, all issues related to music licensing are handled by JASRAC. At present, JASRAC receives JPY4.5 for each individual download of every ringtone. Considering how many millions of ringtones are downloaded each day, it is not surprising that JASRAC is boasting a 2000 revenue figure of JPY106 billion on its Web site. While this is undoubtedly a good deal for JASRAC, it is also popular among the ringtone providers, who would otherwise have to negotiate with each individual publisher. The current arrangement is convenient for providers because they can offer any song by any artist and let JASRAC worry about placating the publishers.

In Germany, the music licensing body is GEMA, and most Japanese ringtone providers initially anticipated that they would be dealing directly with GEMA, as their local counterparts are currently doing. Service proposals were presented to DoCoMo on the assumption that copyright licenses for the ringtones would be obtained well before the service was ready to launch.

In the meantime, GEMA made the decision to have Japanese providers go through JASRAC, who would then kick back a license fee to GEMA. As the date of the service launch draws nearer (currently March 1 for Germany), the details of the agreement between GEMA and JASRAC have not been finalized, meaning that Japanese ringtone providers have no way of proving that their copyrighted content is properly licensed. Accordingly, they will be forced to launch their services with only copyright-free content. This, however, creates a problem in the final approval process with DoCoMo, as it represents a significant change in plans from the content the providers initially listed on their applications.

For the time being, it appears that DoCoMo is willing to overlook the change in content, provided that licenses for the originally planned content are obtained as soon as possible. Of course, the providers are also anxious to obtain these licenses, as it is difficult to run a competitive ringtone download service with only copyright-free content, and competition is stiff for the all-important menu positions users see when they first hop onto the i-mode service. For now, it appears that the only recourse open to Japanese ringtone providers is to attempt to negotiate directly with GEMA, while beginning their services with classical and 'sound effect' ringtones.

Like many others in this industry, we'll be watching the March 1 launch with great interest to see how the issue of copyright ownership unfolds in Germany.

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