It’s Meshugenah to Operate a Streaming Mixtape Site–Atlantic v. Spinrilla

[Note: Meshugenah is Yiddish for “crazy.”]

This is a brutal opinion. No matter how successful this defendant has been in the marketplace, copyright owner lawfare will almost certainly take it down. R.I.P. Spinrilla.

Spinrilla is “a streaming and downloading service for hip-hop music” consisting of over 1.4M songs. It has 19M registered users, 1.5M daily active users, and 14,000 uploaders. Copyright owners hassled Spinrilla repeatedly, sending many takedown notices and getting it to deploy Audible Magic (presumably at significant expense). Spinrilla’s responses still didn’t satisfy the copyright owners, so they sued Spinrilla for over 4,000 allegedly infringed sound recordings.

The plaintiffs successfully sought partial summary judgment on two key issues.

Streaming is Direct Infringement. Spinrilla admitted that it streamed all 4k sound recordings. However, it claimed that streaming isn’t direct infringement. The court disagrees and says the streams were public performances by Spinrilla. This means Spinrilla is strictly liable for the sound recordings at issue in this case and, in future suits, any other infringing sound recordings that are part of the mixtapes (which I assume is pretty much Spinrilla’s entire catalog?).

The court treats this as an easy application of the Aereo Supreme Court decision (with additional citations to Spanski v. Telewizja Polska, ReDigi, US v. ASCAP, and Capitol v. Escape, the Grooveshark case):

Despite the characterization of its holding as limited, the Aereo Court’s reasoning and interpretation of the language and underlying purpose of the Copyright Act apply equally to online music streaming services such as Spinrilla’s,

Spinrilla argued that it lacked volition. The court distinguishes Spinrilla’s cited cases (Hotfile, Perfect 10 v. Giganews, BWP v. T&S, and the seminal Netcom case) on the grounds that none involved streamed music. The court explains:

even if volitional conduct is required to prove direct infringement, the cases on which Plaintiffs rely have all held that the affirmative act of streaming constitutes direct infringement of the copyright holder’s exclusive right of performance regardless of the fact that the the streaming occurs at the request of the user

Spinrilla can still assert other defenses, including fair use, but I’m skeptical those will help. Also, Spinrilla could pursue a licensing scheme in theory, but in practice that sounds expensive, and I wonder what licensing terms would be needed to cover mixtapes.

DMCA Online Safe Harbor. Another defense Spinrilla can assert is the 512(c) safe harbor for works uploaded by users. Unfortunately, Spinrilla didn’t manage the DMCA prerequisites properly, at least for some of its history.

The copyright owners filed suit Feb. 3, 2017 (yes, we’re approaching the 5th year of litigation). Spinrilla adopted its first repeat infringer policy (a 2-strikes policy) on July 23, 2017. On July 29, 2017, Spinrilla designated a notification agent with the Copyright Office. Because of this sequence of events, Spinrilla doesn’t have any DMCA safe harbor protection for infringements before July 29, 2017.

For activity after that date, the plaintiffs challenge Spinrilla’s implementation of its repeat infringer policy. The court sidesteps this issue. Honestly, I was confused why. All of the 4k sound recordings at issue were allegedly infringed no later than October 23, 2017, but it’s unclear if all of those works were infringed before July 29, 2017 (in which case the DMCA safe harbor won’t apply at all) or if some undetermined number were infringed only in the window between July 29 and October 23, in which case the safe harbor might apply. Instead, the court says that none of the works at issue were uploaded by alleged repeat infringers, and the copyright owners didn’t send takedown notices for any of those individual’s uploads, but I don’t know what this matters. If Spinrilla failed to properly implement its repeat infringer policy, then it categorically fails to qualify for 512(c), not just for the works uploaded by repeat infringers. So I don’t understand the relevance of the court’s considerations here or where the court left the safe harbor issue.

No matter what, it seems likely that Spinrilla is on the hook for thousands of works without any safe harbor. Combined with what is surely millions of dollars of the plaintiffs’ attorneys’ fees, Spinrilla should be looking at damages of mid-eight figures or maybe even nine figures. I wonder how much cash Spinrilla has on hand?

Implications. We’ve seen this sad story about innovation before. Innovative new online music services exist at the mercy of the major copyright owners. If the copyright owners want to nix the startup, they engage in lawfare until the startup is illegal, bankrupt, or both. Because of this, we see relatively little innovation in the online music space. Results like this surely scare off potential investors and any legally savvy entrepreneurs. Anyone bemoaning the industry consolidation of online music services ought to take a long look at Spinrilla’s situation and ask where they think the next prospective market entrant will come from.

Case citation: Atlantic Record Corp. v. Spinrilla, LLC, 1:17-cv-00431-AT (N.D. Ga. Nov. 30, 2020). I’ve complained before about how 512 cases are more tortuous to blog than 230 cases because they are so long and technical. This opinion clocks in at 47 pages.