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A Big ‘Oops!’ From ICE

seals of the Justice Department, IPR Center and Homeland Security with the text This domain name has been seized by ICE - Homeland Security Investigations, pursuant to a seizure warrant issued by a United States District Court under the authority of 18 U.s.C. Sections 981 and 2323.
Detail from seizure notice appearing on websites seized by Immigrations and Customs Enforcement in November 2010.
(via Wikimedia Commmons)

Back when the record industry thought it was a great idea to haul individual listeners into court for pirating music, the FBI did not show up at people’s homes with arrest warrants. That job was left to process servers, and the cases were typically handled as civil disputes.

So what on earth was Immigration and Customs Enforcement doing in 2010 when it decided to seize a set of websites, largely oriented toward rap and hip-hop music, at the behest of the Recording Industry Association of America?

These blogs, including the popular OnSmash, were not given warnings, cease and desist notices or any chance to argue their cases. Instead, ICE seized the domains outright. In the case of OnSmash, it took five years for the site owner to regain control of a domain that has perhaps irrevocably lost the momentum and social currency it boasted in 2010.

What happened? These were domestic businesses; nothing was being imported, so Customs was not implicated. There were no immigration issues at play. And it is hard to imagine that anyone, at least on the government’s side, sincerely thought shutting down these sites was a matter to concern Homeland Security, ICE’s parent agency.

To make matters worse, at least some of the sites were legitimate - though it took Homeland Security and another cabinet agency, the Justice Department, five years to figure this out. They were not helped by the fact that the RIAA and rank-and-file record labels disagreed about the sites. Blogs like OnSmash often received new songs and videos directly from managers, labels or artists hoping to secure promotion or a positive review. Much as labels once relied on radio play to help the public discover new music, marketing teams would “leak” tracks to blogs hoping to generate buzz.

Part of the problem for sites like OnSmash was the byzantine nature of our country’s intellectual property laws. The seizure warrant was based largely on the RIAA’s confirmation that certain songs appearing on the sites were used without explicit permission. But rather than letting site owners defend their enterprises as fair use or other protected activity, the ICE simply seized their domains - and held them for, in this case, five years.

Imagine being out of the loop for five years in fields that evolve as rapidly as music and the Internet. In that period, music blogs have gone from dominant forces in the industry to a secondary channel behind social media. Even more crucially, streaming took off in a substantial way during that time. In 2011, music streaming juggernaut Spotify launched in the U.S., and the following years saw the rise of many competitors. These range from once-popular Songza, which was recently shuttered and subsumed into Google Play Music, to the much-anticipated Apple Music, unveiled just last June.

As Stephen Witt wrote for Slate last year, average music fans largely reached the point where streaming became the cheaper, easier way to pursue their favorite artists and discover new ones: “For the first time, a legal business was offering a product that was superior to what was available underground.” For blogs, even if their followings were smaller than a few years prior, this could have been good news, as they were able to direct readers to check out tracks or albums on the services of the listeners’ choice. That is, they could do so as long as the blogs had the good luck not to be seized by the government several years earlier.

Today, a site like OnSmash would have a variety of embedding options that would protect its owners from accusations of violating a label’s copyright. For instance, many artists release new songs first on YouTube, either as lyric videos or full-fledged, traditional music videos. Google-owned YouTube’s robust Content ID system means that labels feel confident the traffic will flow back to their legally posted video, and that if reviewers embed the content, fans can easily find their way back to the official channel. And artists choosing to fly without a label’s support often use YouTube to build a fan base.

SoundCloud, too, offers embedding and has proven to be a boon for new and independent artists trying to connect with potential fans. Instead of sharing mp3s and other downloadable files, these days most artists are happy to offer tracks to stream, on the theory that new fans may want to pick up the rest of the album - or, more likely, come see a show or buy other merchandise. And, as on YouTube, bloggers and reviewers don’t have to worry about being mistaken for pirates by governmental agencies who fail to understand their business model.

So is the government going to make the website operators whole for taking their businesses away in 2010, now that they have decided they were not breaking the law after all? (Or rather, in the words of a spokesman for the ICE’s National Intellectual Property Rights Coordination Center, they decided that there had been insufficient evidence to seize the websites in the first place.) Of course not. In fact, the agency asks for a $7 processing fee to return their property to them.

It hardly rises to the level of cops who lie on official reports, or who use excessive force, or who just grab the public’s property for their own bureaucratic budgetary gain. But it is an abuse of law enforcement powers just the same, and it is part of the long-running trend of the federal government sticking its prosecutorial nose into many corners of American life where it simply does not belong.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book Looking Ahead: Life, Family, Wealth and Business After 55.

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