iTouch`s use of the images and names of artists Avril Lavigne and Shakira to advertise "truetones" (imitations of songs sold as ringtones) is theft of intellectual property "and iTouch knows it", says Sony BMG MD Keith Lister.
iTouch is not disputing the theft; the firm is simply disputing Sony BMG`s right to stop it, Lister says.
"The guts of the matter is that the use of a name and image of an artist to sell a product that is not related to that artist is theft," he says.
However, Sony BMG`s complaint focused on misleading advertising when it was presented to the Advertising Standards Authority (ASA). ASA found in favour of the complainant in November 2005, a ruling which iTouch is appealing.
The truetone advertisements in question, when viewed in their entirety, would mislead the consumer to think they are purchasing the actual songs, when in fact they are purchasing cover versions performed by unknown artists, argues Nhlanhla Sibisi, Sony BMG legal and business affairs director.
This is in breach of clause 4.2.1 of the advertising code, he says. He also argues that disclaimers and caveats at the bottom of the adverts were not good enough to correct the misleading impression.
The iTouch advertisements were taking advantage of advertising goodwill relating to the brands of Shakira and Avril Lavigne without written prior permission from Sony BMG, breaching clause 8.1 of the advertising code, Sibisi says.
What`s at stake?
iTouch customers are aware of what they are buying and are satisfied with it, argues Greg Brophy, iTouch CEO. Vodacom, MTN and Cell C have not indicated complaints were made to them with regard to purchasing truetones from iTouch, he says. This shows there are "no problems from the consumer`s side".
Brophy notes that 243 975 truetones, costing R10 each, were downloaded from iTouch in the December 2005/January 2006 period. Downloads for truetones overtook sales for polyphonic ringtones last year, making them the best selling ringtones in his company.
iTouch is the biggest supplier of ringtones and if Sony BMG wanted to make a point, iTouch would be the company to target, he claims.
Ringtones make up at least one-third of the global mobile download market, estimated to be worth a total of lb740 million at the end of 2005, according to Mintel research. Ringtone purchases accounted for R40 million in revenues in SA in 2005, estimates Lance Rasukin, licensing agreements manager at Exactmobile.
The selling of imitations as truetones creates confusion in buyers, which in turn impacts on companies that sell originals tracks, says Davin Mole, CEO of Exactmobile.
"The consumer becomes confused and dissatisfied when they purchase [an imitation] thinking it is the original. This only damages the reputation of the industry," he says.
The way forward
The ASA directorate will deliver a ruling next week on the issue of misleading advertising. In addition to the specifics of these particular advertisements, Sony BMG has asked the directorate to apply the same principles to all Sony BMG artists.
Lister says the company would consider avenues that would address the intellectual property issue and is taking legal advice.
"We will stop them no matter how long it takes or how much money it costs," he says.
Related story:
iTouch to appeal 'truetone` ruling
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