Live365 has returned from the ashes like a phoenix smitten and left for dead. This is a major feat, but with a number of areas that are in need of being addressed. Each of these we will hit and explain how they were able to bring back their services, the legalities, and potential pitfalls to how they have done this.
In order to understand how Live365 came back from the dead, we need to know how and why they died. The site was originally presented as a broadcasting site where anyone can be a DJ. The way the site was presented and the wording they used made Live365 fall under the label of an Internet radio. Regardless of all the extra options that they presented they still were viewed in the eyes of the United States as an Internet radio which meant that they had all the advantages and disadvantages that Internet radio broadcasters had. This is a big thing to consider when applying the new standards to royalties. Prior to the changes the royalties could be paid as a flat rate in certain circumstances, but the new changes made royalties based on a song by song basis multiplied by the number of listeners. This approach created an expense that was too excessive for Live265 to handle.
Live365 died and it appeared that they were gone for good. This was especially the case when people read the official statement by Live365 that stated that they had explored every avenue and no longer saw a viable solution. Nearly a year later they did find a solution and applied it to their return.
The change that Live365 did was in redefining themselves from what would be viewed as an Internet radio broadcaster to being an Internet broadcasting platform. This may not seem like a big deal, but the term platform is used by many sites and is often used as grounds for indemnity in the eyes of the law. Platforms are seen in social medias (Facebook, VK), social mediums (Twitter, Linkedin), data mining (Reddit, Digg), and in 3rd party sites (Bandcamp, Soundcloud, YouTube). These are sites that supply a framework for people to use to present their own original works, public domain works, or works that they have had legal permission to share on the Internet. In each of these they claim indemnity (to be held harmless) and through it defer any legal issues to the person using their resources.
Live365 doesn't officially present this in a form of a direct indemnity, but do defer to the Digital Millennium Copyright Act. Through this they present that any copyright offenses by their uses can and will result in the deletion of said material in violation. However, the individual presenting the violation has to present certain material to Live365 to ensure they are the original owner of the material in question.
Will this approach work for Live365? They have presented their stance in their terms of services and give a simple presentation of the DMCA law for those that are on their site. This would seem to work to the naked eye.
The problem is that they do not define which laws they are bound to. Here is the link to Live365's terms of service and here is the link to YouTube's terms of service. They look similar, but if you read through them you will see that there are a number of things that Live365 is lacking in theirs. One key note is that Youtube defines the US State they are bound by. Even though the Internet and broadcasting are broadly defined by the US Federal government, each state has certain additional criteria that they can and normally do add to laws for businesses. This is standard in any laws passed by the US Government. That is why not every state has a death penalty for murder in the first and have different standards in real estate. This alone can pose a number of issues for Live365 in the future in both copyright and royalty disputes.