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Zookz.com Record Industry Pirating Result of UIGEA

Written by:
Jagajeet Chiba
Published on:
Jul/16/2009
Zookz.com

Here is an interesting spin on the current state of the record industry and pirating downloads.

Pokerati.com on Thursday featured a great entry on something many of us have been expecting to happen for a very long time now and - quite frankly, we're surprised it hasn't happened sooner.

There's a new company in the song (and video) downloading game - Zookz.com - and its entire business model is based on selling "pirated" copies of American songs and movies, as permitted by WTO sanctions against the United States for infringing on Antigua's ability to compete in the online gambling industry.

From what we understand, ZookZ offers a subscription-based model for unlimited monthly movie and music downloads. It is not pay-per-song like iTunes, nor a file-sharing "service" like LimeWire or BitTorrent. Members simply download stuff directly from Zookz' servers in Antigua. Supposedly the new company operates within the parameters of the 2007 WTO ruling between Antigua and the United States, which allows them to break US copyright law to the tune of $21 million/year.

What's not clear is if that means they can peddle $21 million worth of rights-protected bits, or run a business limited to $21 million in profit. Either way, I gotta think the ever-litigious RIAA won't take lightly that much money being ganked from its artists. Could be wrong ... we'll see.

So what exactly is this all about?

Antigua was one of the first nations to legalize, license and regulate online gaming. Some countries, most notably the United States, argue that because the gaming transaction is initiated in their jurisdictions that the act of online wagering is illegal. This argument has been repudiated by the World Trade Organization.

The WTO found that the Unlawful Internet Gaming Enforcement Act (UIGEA) passed in October of 2006 was a prima facie violation of the GATS treaty obligations enforced by the WTO, resulting in a series of rulings unfavourable to the US.

A rider to the arbitration ruling affirmed the right of Antigua to take retaliatory steps in view of the prior failure of the US to comply with GATS. These included the rare, but not unprecedented, right to disregard intellectual property obligations to the US.

TechDirt.com had this to say about the touchy subject:

"Honestly, it seems like both sides are stretching the meaning of the ruling. The US and the entertainment industry basically want to completely ignore the WTO ruling, and interpret it to be entirely meaningless. That makes no sense, of course. The WTO wouldn't allow such sanctions unless there were a way to actually make use of them.

 

"That said, it doesn't seem like the WTO ruling gave random private companies carte blanche to offer up music and movies. In fact, the Zookz interpretation gets even odder, where it interprets the $21 million to mean how much it can make, rather than the value "lost" to the industry. In fact, because of this Zookz claims that if it gets too close to selling $21 million (or if others enter the market, and combined they approach $21 million), they'll just have to start giving music and movies away for free to avoid going over the limit. While the WTO did want to give Antigua a weapon against the US, it's hard to believe that was what it meant. So, while this may be amusing to watch, the likelihood of Zookz lasting very long seems slim, at best."

By Friday evening, the Antiguan Government had issued a denial that Zookz.com is permitted to operate there (read more here) 

Jagajeet Chiba, Gambling911.com 

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