Copyfutures

The Future of Copyright

Many of the themes explored in the seminar that produced Copyfutures are examined in The Future of Copyright, available for download on SSRN. Here is the abstract:

Sometimes technological change is so profound that it rocks the foundations of an entire body of law. Peer-to-peer (P2P) filesharing systems - Napster, Gnutella, KaZaA, Grokster, and Freenet3 - are mere symptoms of a set of technological innovations that have set in motion an ongoing process of fundamental changes in the nature of copyright law. The video tape recorder begat the Sony "substantial noninfringing use" defense. The digital cassette recorder begat the Audio Home Recording Act. The internet begat the Digital Millennium Copyright Act.6 Napster begat Napster. We see the law morph right in front of our eyes, but its ultimate form is still obscure. As a consequence, the future of copyright is up for grabs. We live in a magical, exhilarating, and frightening time: Many alternative copyfutures8 shimmer on the horizon, sometimes coming into sharper focus and sometimes fading away. In this heady atmosphere, the idea slingers are at work. Richard Posner and William Landes have proposed indefinitely renewable copyrights. Neil Netanel, William Fisher, and others propose to legalize P2P filesharing and replace the lost revenues with a tax on hardware and internet service. Joseph Liu suggests that the scope of fair use should grow with time. Mark Lemley is debunking ex post justifications for intellectual property. No surprise, the academics do not have a monopoly on idea slinging. The Recording Industry Association of America (RIAA) and Motion Picture Association of America (MPAA) have gone on the offensive, proposing legislation like the "Induce Act," targeted at shutting down P2P filesharing services that allow third parties to share copyrighted content. No copywarrior is more prominent and influential than Larry Lessig. Lessig was the brilliant architect of Eric Eldred's failed challenge to the CTEA's retroactive twenty-year extension of copyright terms - effectively a twenty-year moratorium on new works entering the public domain. In Free Culture, Lessig has remade himself as a "norm entrepreneur" - a public figure with the towering ambition of reshaping "copynorms" - the fundamental set of social norms that shape perceptions of the morality of filesharing and the legitimacy of legislation that shrinks the public domain. This essay examines the ideas in Free Culture in the context of current controversies over the future of copyright.

Some Leftover Thoughts re: Open Source

    I surprise myself this morning by working on something that will yield no credit for this course.  But that ties in directly to the contents of this post.  One topic of discussion was why people produce open source works and why their employers "allow" this from an economic perspective.  Simply put, where's the gain?  This was discussed in a scholarly article posted on this blog (if class were still in session, I would link to it, as I originally intended, but after searching for 3 minutes, I've given up.).

    My theory is that people engage in creating open source works because they like to, it provides some form of personal utility.  Employers "allow" it simply because the employees are still getting their job done.  A simple example is Prof. Solum's fine blog.  From what I've read, law professors receive little credit for blogging.  Again, I would provide links if this were for credit, but from regularly reading Instapundit, the Volokh Conspiracy, it seems law school administrators care little, if at all, about their professor's blogging.  I could be wrong, but my impression is that a professor's job is to publish articles in prestigious journals and do it often.  In raising their own "stock," they raise the "stock" of the institution they're affiliated with.  So what explains the choice of certain professors to invest what sometimes is a substantial amount of time into activities that have nothing to do with their job?  And why do administrators put up with it?

Volokh states:

Some blogs ask their readers for money to help operate the blog. That's quite understandable, but we fortunately don't need that -- the real cost of running the blog is time, and that's generously subsidized by various universities and state taxpayers.

We're in it for the eyeballs. (Yumm, eyeballs.) So if you like the blog, just let your friends know about it -- perhaps take a blog post you really like, pass it along (together with its URL) to people who you think would enjoy it, and tell them that there's a lot more where that came from. Or not: We're happy with just your eyeballs, too.

    I suspect that the same rationale explains the activities of Prof. Solum.  The belief in the power of ideas and the belief that the dissemination of ones ideas is worthwhile is probably what motivates folks like Solum and Volokh into academia in the first place - and in so doing, foregoing the much larger financial rewards that would be theirs in the private sector.  Both have impeccable credentials, but their salary is probably commensurate to that of a 2nd year associate w/ similar credentials.

    So why do their schools put up with this?  Why aren't they forcing them to spend the time they spend on blogging on writing more LR articles?  Probably because they still publish.  Goodness knows that Volokh is prolific, Posner-esque even.  Well, I lie.  The amount that Posner publishes is unreal.  And he also has a blog! 

    I wouldn't call myself an economist, but from the little I've read, it appears that behavioral economics is gaining greater credibility, and in some ways, diminishing the iron grip that rationalist economics has had over the past few decades.  For example, either Prof.'s Solum or Volokh could spend an extra 5 hours a week consulting instead of blogging.  Why don't they?  It would give them a few thousand dollars extra a month which they could use towards whatever they enjoy.  My guess is that they enjoy blogging!  What a crazy notion!  Same for the open source folks and their employers.

one for the road

While I'm hoping this weblog will continue past this semester's demise, here's one last parting shot just in case.

BitTorrent mega-site Suprnova.org has been shut down.

The website creators got a little scared at the MPAA's recent gustappo tactics and decided that closing down the website was probably the safest plan of action.  And who can blame them?  Finnish (yes...Finland) police raided a website that purported to have torrent files for over 10,000 illegal movies, music, and software.   

So now we've got an international policing of America's copyrights.  Anyone else just a bit scared of the possibilities of this?   Global copyright protection is the next wave of the copyright battle.  America and the few big businesses in it that own a lion's share of the creative works are trying to put pressure on foreign countries through the WTO and other trade related organizations to comply with our increasingly stringent copyright laws.   So now we have instances like the Finnish police goin SWAT style on website owners, and legitimate sites like Project Gutenberg Australia being forced to take down publicy allowed works from their website.  I guess now you can rob a bank and move to mexico to escape jurisdiction, but you cant escape the long arm of copyright owners... 

searching for the pot of gold

You know, somewhere over the rainbow theres an answer to the copyright mess of today.  Sure it might take some magical red slippers, a whole lotta faith, and a couple of little people (justice scalia, you dont count) to get there, but at some point our society will adapt.  But one thing's for sure- the only thing that I KNOW is for sure after this seminar- we're definitely not in Kansas anymore.

Kansas of course would be the antiquated ideals of copyright- the vision promulgated by the founding fathers and placed into America's constitution.  Granting a limited right to promote the progress of the useful arts seemed like a good idea at the time, but more and more I'm thinking blasphemous thoughts:  maybe the founding fathers got it wrong.

My good friend Peter Hsu, a great contributor to this weblog and class, asked me at the start of the semester what I thought the future of copyright should be.   I answered with a simple "none."   Peter of course thought that was ludicrous.  "None?!  But there has to be copyright."  I backed of my statement at the time, and more and more during the semester, I thought of that initial conversation.  And I think Peter really was right- there has to be copyright.   At least in our society, for the near future.  I look at copyright the way Thomas Paine looked at government- its an evil...but a necessary one.   Just as Paine dreamed that the natural state of man would someday be realized- that as Thoreau argued, we would eventually become human enough to restrict our vices naturally- I dream that someday copyright will be an unnecessary aspect of our society.  That creation will be incentive enough to create.  That the government provides protection only to an "identity of authorship."  The personality of a creator is embodied in his/her work, and I think -this is what you get for having a musician in the class- that any artist would tell you it is far more incentive for their work to be recognized as their own than securing an economic monopoly for 100 some odd years (for more on my discussion of "identity of authorship" incentives, see this previous post). 

But I, like Paine, am describing a dream state, one that does not and cannot exist right now.  Big business has spent too long investing and profiting from the commericialization of art created by our Constitution.  Copyright wasnt even a debatable issue twenty-five years ago, and I think that might be the most crucial aspect of all of this- getting the word out about copyright: what it is, what it effects, and who profits and loses from its current incarnation. 

So step one of my future for copyright is education.  And i'm not talking the "piracy and p2p sharing is bad" flicks the RIAA circulates to public schools.  If copyright's objective is to benefit society by promoting the arts, then society should know what its getting in the balance. 

Step two is bifurcated.  Either put some real teeth into lawsuits, or stop suing at all.  The middle ground is not an effective way (as Tommy O'Reardon demonstrates) to curb piracy.  And while I dont believe that congressmen, arbiters, and the general public want more suits aimed at more file-sharers, if you bring enough of them-against the right people-, you'll eventually get a positive reaction.  On the flip-side, stop the suits all together.  All its doing now is giving bad press to legitimate copyright interests, and further skewing the copynorms of today by making piracy even more cool, hip, down, whatever.

Step three is cut copyright terms in half.  No, more than half.  Three quarters.  This Life plus 120 years talk is absolutely ludicrous.  It takes so many amazing creations out of legitimate public use for much too long.  Libraries, archives, and their ilk have been around much longer than copyright, and their purposes are much more noble: to educate and preserve our society's history.  Copyright now is threatening to impair our ability to continue this (Aaron Hand, thanks for that enlightening piece).  A copyright term of 50 years is much more feasible, and still gives the economic incentives to create.  Many works are not profitable after their first few years of existence, and should they be, a system of paid re-registration might be a more adequate solution than a blanket protection of all creations for longer.  My only problem with such re-registration would be that it creates separate tiers of copyright terms, and most of the public would be hard-pressed to figure out when a work is protected or whether it has been extended.  But this could be partially rectified by publishing a list of protected works quarterly, and moving the burden of investigating whether a work is protected to the person seeking the public use.

Step four is the hardest one- patience.  We cant go looking for the quickest or easiest solution to copyright.  This is an issue that will stick around for a while, with newer and more advanced digital technology constantly changing our perceptions of what copyright is and what it should be.   The INDUCE act, the piracy act,  the BCA and DMCA , all these have their flaws- flaws we've pointed out in class.  Lets just take our time ith this, and create a statute that is flexible enough to handle the stress of new developments in copyright industries, while being forceful enough to disallow and punish rampant misuse of copyrighted materials.  And of course, patience to hope that one day, all this copyright nonsense will be unnecessary, and I can just get back to writing songs on the beach for the people I care about while sipping my pineapple juice.

Copyright is Here to Stay – The Real Future of Copyright

We spent this semester delving into the world of copyright with hopes of finding what the future would entail. Much of the semester and even in the conclusion it appeared that the future of copyright was not merely uncertain but bleak at best. I admit that I bought into this belief that copyright might indeed be dead since there were just too many obstacles for it to survive. P2P just wouldn’t let copyright survive. However, when I take a step back and look at the big picture, I just can’t accept the fact that copyright will fail. I can’t accept copyright failing for one simple reason – MONEY. There is just too much money at stake for the Music, Movie, Software and other copyright developing industries (hereinafter “copyright industries) for them to lay down and not put up a fight. There is so much money at stake that these industries will not only put up a fight, but they will put up a fight and win.

Now winning might be a relative term, but again what does winning entail? Making money. Currently, the copyright industries are still making enormous profits. It is unclear if P2P has really even put that much of a dent in sales. People are still going to the movies, still buying movies, still buying music, still going to concerts, still buying software and production companies are still making money. The obvious concern is not the present however, but what the future will entail. The concern is that P2P is just starting to grow and just starting to show an effect on the copyright industries. There are worries that soon everyone will just use P2P programs to get illegal versions of files and this will kill sales. While it is true that P2P has just began take off in the last couple years and there is no signs of stopping, I feel people often overlook one major factor on the side of the copyright industry – they are just now beginning to fight back.

The copyright industry is just now beginning to really try to curb illegal file swapping. For the most part the copyright industry sat on its hands and allowed the P2P industry to flourish, but when it has taken a stand, people really have listened. Don’t believe me? Well ask Napster, Grokster, Kazaa, and now even BitTorrent how much power the copyright industries have. And if you still question it, look at the profit margins for the copyright industry. The bottom line is they are still making money and lots of it at that.

So far I have come across as if there really isn’t a problem for the copyright industries at all. But obviously everyone can see that there is a potential problem for the copyright industries. If people really did just stop buying files and just downloaded them all for free then of course copyright would fail in its current state. However, my real point is that the problem is not a full fledged problem yet, it is still in the potential problem phase. And I feel it is fair to call it a potential problem still because the companies are still making money. P2P and illegal file-sharing only truly becomes a problem when the copyright industries are no longer making money and production is no longer profitable. The problem is not only in the potential phase but it is also in the very beatable phase. Now beating this potential problem won’t necessarily be easy, but nothing worthwhile usually is. And the biggest advantage is on the side of the copyright industries because they have the money, power, and resources to win.

Many will question the viability of defeating illegal file-sharing because there is no one clear cut way of stopping it. New technology alone won’t work, changing the laws alone won’t work, changing the infrastructure alone won’t work and even suing alone probably won’t work. The beauty of the copyright industries fight, however, is that each of these alone doesn’t have to defeat P2P. Not having one clear cut way to curb illegal file-sharing, isn’t a disadvantage, but really a major advantage. The copyright industry can attack illegal file-sharing from multiple fronts and force the illegal file-sharers to not just beat one obstacle but several. So even if one tactic is beat, there is still another obstacle for file-sharing to overcome. In the end this is really an arms race and the fact of the matter is the copyright industry not only has more arms, but they have more arms at stake as well.

I’ve now come up with this great conclusion that protecting copyright not only can be done, but will be done. However, the real question is not if it can be done, but how can it be done. I honestly think the answer is simply, the copyright industries just need to keep on doing what they are doing. Attack illegal file-sharing from every angle and make it so illegal file-sharing just isn’t worth it. So what are these angles? I think it comes down to about four major categories of attacking methods for the copyright industries: 1) Technological Advancement, 2) Cooperation, 3) Updating Laws and 4) Lawsuits. Each of these groups has several subcategories and a combination of each of these categories will allow copyright to not only survive, but to continue to flourish.

I’ll give a brief rundown of each category to show how powerful each can be alone and in the end how the combination of all of them will spell victory for the copyright industries.

Technological Advancement

The first line of defense for the copyright industry is to continue to develop new technology. And the technology doesn’t just have to be technology to fight copyright, but new technology in general. Now I know the first thing that pops into everyone’s head when I say this is – whatever you can make, I can hack better. While I agree that pretty much anything made will likely be hacked at some point, it is not really necessary to make unhackable files and media. You don’t have to win an arms race by making the unstoppable product, you just have to continue to make products that will slow the other side down enough to keep you ahead of them. And technology can definitely do this. We have to keep in mind that the use of encrypting files and protecting against hacking is a relatively new concept. Music CDs don’t even have any encryption. And sure DVDs have encryption and it has been hacked into, but even that was a first effort on the part of encryption designers. The fact is, there are endless design capabilities that may be extremely hard to hack and hard enough that will slow down illegal use.

So how will this work? New technology is the key. We likely can’t just start putting encryption on CDs since that would require a complete overhaul of the devices that play the media and there wouldn’t be much incentive for the user. But what can be done is creating a new type of media that users want and are willing to pay for. This has been done in music several times from vinyl to 8-tracks to CDs to mp3s. It has also been done with movies from reels to beta to VHS to DVDs. So changing media is not only a possibility, but a reality. There are several new products on the market from HDDVD, Blu-Ray media, and even relatively new forms of digital media such as Windows Media Audio (WMA) and Apple’s music media (AAC). There are endless possibilities for new types of media on the market and people will pay for them so they can get the newest and best files.

Once a new media is made then new encryption can be implemented. And again, the encryption may be eventually beaten, but this ok. Hopefully it will at least take some time for the encryption to be cracked and when it is cracked it won’t be that simple. Even now it isn’t the easiest process to hack a DVD with its limited encryption. You first have to find the software to rip the media, then you have to learn how to use it, then you have to take the time to hack it, then you have burn it to a DVD. This is way too much of hassle for the average user. There is a way to cut down on the steps – downloading the movie through a P2P service. DVD’s might be a hard example right now as downloading a 4.5 GB file still takes a long time even with high speed internet connection, but eventually bandwidth will increase (I actually just received an email today from SBC that they will be increasing my upload speeds to 384kbs. This obviously doesn’t increase the speed of downloads, but does help download speeds indirectly by ensuring there is enough bandwidth so downloads can reach their maximum speeds). However, even with smaller song files putting enough encryption on the songs will make it a pain and hassle to rip an entire album or multiple files. Surely it can and will be done by those who really want to, but the encryption really just needs to deter the average user since those are the people buying the products in the first place.

Further, technology can be used to identify each file and allow the files to be tracked to further hinder the spread of illegal copies. Once a file is identified as copyrighted or protected it will be much easier to implement programs that help prevent these types of files from being shared. This idea leads into the next idea of cooperation which is could employ a system of “tagging” files.

Cooperation

Protecting copyrights will not be solved by just one group fighting on there own. There are a lot of file-sharers out there and thus it will take an even larger and more powerful group to come in and stop them. This is where cooperation comes into play. The bottom line is that all the power is in the hands of large groups. The individual user doesn’t get anything unless the large corporations and groups allow the individual to get it. So allowing the user to only get and transfer what the copyright owner’s want simply means teaming up with those groups who have the power to control such transfers. I see this cooperation happening at three different levels.

Small

This group consists of the smaller and more localized groups that have control. Prime example are colleges and universities. College campuses are notorious for illegal file-sharing because there is substantial bandwidth available and people with a lot of free time to use it. This problem can be easily stopped however by giving the colleges the power to prevent copyrighted files from being shared. I blogged earlier about efforts made by UCLA and

Florida

to prevent illegal file-sharing. The campuses employed programs that were as simple as preventing copyrighted material from being transferred to as drastic as preventing all P2P programs from being used. Both methods have substantially cut down on file-sharing on the campus and are praised by the colleges since they cut down on bandwidth usage and costs substantially in the process. I think the complete halt of P2P programs might be a bit harsh, but then again if you are going to prevent all copyrighted material from being transferred, you have cut off the major purpose of P2P programs for college students so eliminating P2P altogether isn’t that much more of a step. Though there are legitimate uses for P2P which should be allowed and explored and thus a less stringent means is probably better.

Businesses and local internet sources such as libraries could also employ a copyright checking system. They appear to be relatively easy to use and I believe are being offered for free. There is still the problem with the average home user, but they are tackled on the next level of cooperation.

Another smaller level is through advertisement. People buy into ads, that’s why we have them. The idea of using legal file-sharing really needs to be sold and illegal file-sharing needs to be discouraged. I know we all think the lame ads before the movies discouraging people from sharing are worthless, but honestly the more publicity there is against it, the better chance of the Copynorms being changed. That is what a lot of this boils down to – changing the Copynorms. And one major way to change it is to really make people think that file-sharing is wrong and to make people aware of the potential problems. And if others losing money doesn’t work then start scaring them. Warn them of the potential legal ramifications involved and an even more realistic problem of viruses. These might be small steps but they are very important in the big scheme of things.

Intermediate

This level of cooperation involves the idea of vertical integration or at least more widespread cooperation on a larger level than just schools and businesses. This level will help curb illegal file-sharer with the common at home user. Right now the average home user can get high speed internet which provides quick and easy downloading of almost any type of media in a system which is relatively unmonitored and unrestricted. This I believe posses the largest threat to copyrighted material and thus the most effort is required to curb this use. While this might pose a huge problem, there is also a very doable solution.

Fortunately for the copyright industries all of the files sent by P2P users must go through ISP regardless of what type of file-sharing method is being employed. This means that the ISP can monitor everything that is going through its system and also means that it can stop anything that it doesn’t want sent. The hard part is obviously making the ISPs to not want certain things to be sent on their networks. Right now there is little advantage for ISPs to prevent users from sharing anything on P2P networks since those are the people paying the ISPs’ bills. However, if the ISPs can be given an incentive to stop the copyrighted material from being shared, then the copyright industries are in business.

One major incentive could come through vertical integration. I won’t get into the ends and outs of this idea as it has been discussed at length before, but the general idea is that the copyright industries will buy the ISPs or vice a versa and thus create an incentive to stop copyrighted materials from being sent. If the copyright industries own the ISPs they will obviously not want their networks to be used to transfer illegal files and thus lose profits from their copyrighted material and thus they will monitor transfers and prevent illegal file-sharing. Alternatively, the companies may not mind file-sharing as much since it will increase the number of people who buy their ISP service and thus the copyright industries will make up lost profits on the ISP end. The idea is a little more complex but the general idea and premise is simple – if you own both the means and the media then you will have an incentive to maximize profits from each. I think this is a brilliant idea and will likely be the real winner in preventing most of illegal copyright uses.

The real hurdle here will not giving the copyright industries the incentive or money to make this happen, but given them the actual power to do so. This will create an enormous monopoly on the markets and may be deemed unfavorable to many groups. We’ll see how it plays out, but I think if the copyright industries really made a push for it, they could get it. What it really boils down to is Microsoft being able to take over the world since they love to own anything and everything. I wouldn’t be surprised if they start incorporating ISPs into their repertoire in the very near future.

Global

The final level of cooperation is indeed the biggest and likely the most difficult. Even if the copyright industry can stop illegal sharing in the

US

, what does it matter if the other 5 billion people in the world can illegal share the files? This is where global cooperation comes into play. This is obviously going to be a major dilemma since it is hard enough to get countries to be at peace and to stop killing each other, let alone encourage them to put time and money into preventing illegal file-sharing. However, it can be done. Once major resource is WIPO which has been implemented to make international intellectual property rules and regulations. Enforcement of these rules will obviously be difficult, but enough support from the copyright industries could really push this matter.

I really believe we can get other countries involved in preventing copyright abuse and if for no other reason, we control most of the media. The

U.S.

produces a ton of products and if people don’t want to follow our rules then we can just stop shipping to those controls. We are kind of like the ISP’s of the world – almost everything has to come through us one way or another. This might be a large exaggeration but we do have a strong pull and similar incentives to other large copyright producing countries and thus combining forces with those countries could really put a stranglehold on any illegal file-sharing.

Update the laws

A third way to prevent illegal file-sharing is to continually update the laws. We have the DMCA in place right now and there have been numerous bills on the table such as the Induce Act and the Piracy Act all of which could curb many file-sharing problems. We have seen that these measures are a bit extreme and not supported in their current form, but other smaller steps can surely be taken. And actually if the copyright industries push hard enough I really think even large measure similar to the Induce Act could even be passed.

One idea that I really like is shorter terms on copyrights. If companies aren’t really making money on a product after 3-5 years then why try to stop those files from being shared? Put a 5 or even 10 year cap on copyrights and move on. The owners will make there profits and then there is one less thing for the detection systems mentioned above to have to worry about. The new and fresh media is what really needs to be protected so why not just focus on that. Sure some items will be hot for longer than 5-10 years and thus the copyrights should be able to be renewed, but everything else should be left to the public since its not like any money is being lost anyhow and honestly that’s what the copyright industries are concerned with.

Regardless of what is eventually passed, changing the laws is always a means to deter illegal activity. The real problem isn’t creating the laws, but enforcing them. This is where the final idea comes into play.

When all else fails – Sue the Heck out of them

Really if nothing else works and if none of the above methods were ever employed copyright owners can always fall back to lawsuits. The fact is if you have a copyright then giving away an illegal copy is just that – illegal and thus a person can be sued for this. Copyright owners always have a means of protecting their product through lawsuits and it can actually be a great deterrence. Napster was the first big lawsuit which completely shut down that system. Sure file-sharing has found a way around this problem, but it sure put a huge dent in the file-sharing armor for a bit. Now we have the new breed of file-sharing programs such as Grokster/Kazaa and BitTorrent. All of which are being sued right now.

If Grokster and Kazaa lose then we will see a major hit to the file-sharing application industry. Sure the programs will still be available, but they will not be updated and will not allow for the most efficient and newest resources to be used. If the programs can’t be updated then it would seem you could create a file that couldn’t be transferred through those networks. Obviously you have the problem of individuals making programs not for profit which can still be used without possibility of the main source being sued, but these programs are much harder to distribute and market since you can’t get the worldwide popularity without advertisement and easy distribution means. Making these programs illegal or at least liable for prosecution will likely prevent them from distributing the product on major sites such as download.com and others since the product has to be registered on those sites and would thus allow its maker to be tracked and sued. This will make the programs have less users and make it much more difficult to find media. There will then be less incentive to use such programs as it will take too much time and effort for minimal gains and thus if people really want the product they will just go buy. This sounds a lot cleaner and easier than it is, but I think the general premise is true. If you make it harder to distribute the products then there will be less users and with less users it will be harder to get files and the harder it is to get the files the less incentive there is to get the files illegally.

There is also BitTorrent which is a different breed of file-sharing program but seems like it will be facing similar problems. Many of the major BitTorrent sites shut down this weekend because of threatened suits. It is easy to track these sites because they are actual centralized websites which are necessary to find what files are available. This is similar to Napster in that regard and thus makes it much easier to target sources. While there will likely be BitTorrent sites they will not likely grow as large as such super giants like suprnova.org due to fear of lawsuits. People really don’t like getting sued, especially when the ramifications can be so harsh.

Even if we stop these programs we still have the individual users to worry about. Most of the programs will still work even if not updated or readily distributed. The bottom line really comes down to changing the attitude of users towards illegal file-sharing. One way is to change the Copynorms as mentioned above. Make people not want to break the law. Another ways as mentioned above is to scare them. Threaten lawsuits (or actually bring them) and warn them of potential viruses and other problems. Another way is to continue to put bogus files on the networks which will frustrate the users from using the programs because it is just too much of a hassle. These may be some deceptive means but really this is a survival of the fittest and is nothing worse than what people who are stealing products are doing and actually these means are legal and mostly righteous. It is definitely possible to discourage most users. If file-sharing isn’t easy and hassle free, then people just won’t use it. So the copyright industries just need to employ means of discouragement and the users will fall.

Conclusion

The world of copyright is not over by any stretch of the imagination. There is just too much money in copyright for it to be over and the copyright industries just have too much power and control to allow it to happen. Illegal file-sharers won’t go down without a fight and they will probably never die, but the bottom line is copyrights will continue to exist and the copyright industries will continue to flourish. The copyright industries really do have the power here, now they just have to use it.

Can I Call This a "Solution" if I Don't Think There's a Problem?

    It seems as if no one in our class likes the current copyright regime.  What I find most interesting, however, is what we identify as its problem.  Some think the problem is that the regime is too restrictive, and concentrates too much power to a few large corporations.  Others think the problem is that the current regime is so easily, and repeatedly infringed upon, with little consequence that it's viability is in question.  I tend to agree more with the latter than the former. I will focus exclusively on the relationship between digital media copyrights (specifically music and movies) and P2P, the area we spent the most time on and also the most interesting.  I may post more, but this post will serve as my "final post" wherein I identify the problems I see with the current regime (including their tactics), and offer a practical solution on how to remedy them.

    The biggest problem I see with the current copyright regime is that it is so easily and repeatedly violated that I fear the content providers will seek to regulate emerging technologies in some way.  And succeed.   We may  feel smug in our "knowledge" that the "horse is out of the barn," but  content providers don't appear to uniformly hold this view.  Also, history shows the content industry isn't shy when it comes to prosecuting and regulating enabling technologies (Betamax, Napster, Grokster, INDUCE, etc.). 

My solution for content providers is three-pronged:

1. Selectively sue infringers
2. Tell your story more effectively
3. Cut prices

I. Selectively Sue Infringers

    Even at this late date, many people do not think of downloading content for personal use as "stealing."  This doesn't much matter so long as they know it's illegal and will be punished for it.  A recent Harris Poll  of 2,306 adults revealed some disturbing results:

Fully three in four adult Americans (75%) agree that "downloading and then selling the music is piracy and should be prohibited, downloading for personal use is an innocent act and should not be prohibited."

This is consistent with a Harris Interactive survey of teens released in October 2003 which showed that roughly three in four teens feel that downloading music files without paying (74%) and letting others download files from them (78%) should be legal.

Nearly two of three adult Americans (64%) agree that musicians and recording companies should get the full financial benefit of their work. (all emph. added)

    Certainly I can't be the only one who finds it strange that 75% of respondents would simultaneously believe that "downloading for personal use is an innocent act and should not be prohibited" and, that "musicians and recording companies should get the full financial benefit of their work."  If we're to assume - correctly, I might add - that the extent of the financial benefit musicians and record companies receive is almost exclusively a function of the legal rights afforded them, then this these two beliefs are contradictory.  Musicians and record labels   I suspect that most people don't view copyright law this way. 
   
    The majority also agreed w/ the first part of the statement that, "downloading and then selling the music is piracy and should be prohibited."  I think most people feel that if someone were to do this, they would receive the financial benefits that rightfully belong to the musician and record labels, thus depriving the rightful parties of that financial benefit.  I think  those same people feel that when they are "downloading for personal use[,]" they are committing an innocent act because they are not receiving any financial benefit.

    Content providers should file lawsuits against the largest individual infringers on the sharing (supply) side.  Fellow classmate, Tommy O'Reardon, has a similar proposal.  He seems to have been met with more skepticism, resulting in a post titled, "Why won't anybody listen to me?"  (I'm listening Tommy!).  Lawsuits would serve two purposes: (1) Reduce the number of large file-sharers, thus, reducing the number of copyrighted files on the network and (2) Educate the public that downloading or uploading  copyrighted content, even for personal use, is a crime.

    In, "Reducing Digital Copyright Infringement Without Restricting Innovation," author Mark Lemley states:

While the number of users of p2p networks such as Morpheus and (before the injunction) Napster is massive, the overwhelming majority of those users engage only in downloading. Indeed, by one estimate, 3% of the users of a p2p network upload 97% of the files on that network. These high-volume uploaders also seem to be the users most likely engaged in uploading illegal content, rather than providing access to legal files. They are easy to identify, both because they will repeatedly appear in content searches and because many run so-called "supernodes" that facilitate fast downloads.  (emph. added)

     While the exact effect is unknown, a likely drop in file sharing would occur.  The only question is how substantial that drop would be.  The content providers need not sue every infringer - a "solution" that many have rightfully criticized as impractical - to substantially reduce infringement.  The secondary effect would be to scare current uploaders to stop, as individuals benefit little from uploading.

    George Mason University Economist, Tyler Cowens, argues that, the lawsuits aren't done to scare off downloaders (a point I disagree with, if not in intent, at least in effect), but rather they are:

about spreading the idea that downloading is wrong and illegal... think of the lawsuits as one way to buy space in the newspaper, but without paying advertising rates.

    In a later post on his blog, Marginal Revolution,  Cowens gives us the bottom line:

I see the music companies as trying to hold back a new commercial norm. Specifically, the music companies are trying to maintain the old norm that you should always pay for music.

Two years ago most [American] downloaders did not know that their activities were illegal. Few uploaders felt guilty about making large numbers of songs available for free on the Internet. It was viewed as akin to lending your CDs out to your friends, except that the "friends" here were both anonymous and large in number. "Art should be free," right?
...
The music industry knows that the long run will bring a network of free music. It knows that free music may have illegal status, a "grey" status, white status (recorded from the radio), or perhaps be pirate (from abroad) but not illegal in the actionable sense. But there will be two networks, a pay network and a free network.
...
The music companies - present and future suppliers of the pay network - do not wish to face a ten year period where everyone is used to getting music for free. They do not want an entire generation to grow up thinking of music as a free commodity. They do not want hackers and illegal downloaders to become established as folk heroes.

Once commercial norms become established, they are difficult to dislodge. We are all used to breathing air for free. Imagine the response if suddenly we had to pay for air as we now pay for ice cream cones. Maybe the air would have a better quality and the price would be very low. Still I predict there would be a public outcry....  They cannot live with a norm that music should be free.  (emph. added)

    This ties back in to that other horse, still in the barn.  This is the single most important tactic that content providers must implement.  The MPAA is has announced that it plans to sue infringers, a decision partly based on what they saw the music industry go through.  The MPAA believes that the RIAA acted too slowly in filing civil actions against infringers, resulting in unnecessary losses.  They also believe that the the music industry's recent uptick is in some part due to the RIAA's renewed vigor in pressing ahead with lawsuits.
   
    Almost every foreseeable consequence from filing suits favors the content providers.  There is very little downside to this tactic because in reality, consumers have little else to choose from.

II. Tell Your Story More Effectively

    America's media companies are the richest, most influential, and most effective in the world.  To gaze across the global expanse is to witness American cultural hegemony, in large part shaped by these media companies.  Which is why I am always surprised at how inept and ineffective their anti-piracy advertising campaigns always turn out.  Content providers should leverage their natural institutional skillset, emphasizing storytelling.
    Show real individuals - no millionaire rap stars, please -  that were really harmed in some way and tie that back to downloaders.  At the same time, dramatize a real life lawsuit that will be prosecuted without mercy to show what can happen to violators.  Make an example out of a particularly egregious violator and explain that anyone could be next.  And then prove it by dramatizing a real court case against an "average Joe" or "average Jane."

III. Cut Your Prices

    Content providers will have to accept the fact that they can not completely stop P2P infringement.  In turn, they can no longer depend on their traditional distribution channels to provide the revenue streams they once did.  This does not mean, however, that content industries are headed towards inevitable decline, but it does mean that they will have to compete with P2P in the short term until they can innovate new channels and/or mediums.  The DVD is a great example of this innovation.  The new format / medium enabled content providers to generate nearly pure profit via the reissuing of hit films from their catalog; films that were producing little or no revenue prior.  The same Harris Poll cited above also shows:

[A]lmost... 70% say, "If the price of CDs was a lot lower, there would be a lot less downloading of music off the Internet."

    The hope is that lawsuits, coupled with a "good cop / bad cop" media blitz should make illegal file sharing much less attractive.  However, most of the hesitation towards file sharing  should be as a result of fear of punishment rather than some moral epiphany from the ad blitz.  I have no delusions that the 75% of the population who think that "downloading for personal use is an innocent act and should not be prohibited" will now view their actions as culpable of deserving of prohibition.  When consumers have only two choices, as they do here, the attractiveness of either option is a function of the other.  If content provider, for example, were to implement a five fold increase in prices (e.g. $55 movie, $90 CD) at the same time, file downloading would appear much more attractive, especially to the large segment of the population that was effectively shut out from the legal market.   

    For the short-term (1-4 years), content providers should cut their prices 15-30% across the board.  This will have several effects:

1. Welcome Back!  Lower prices would soften the financial blow to those consumers that are being (re)-incorporated back into the legal market - helping to ease them (back) into the habit of paying for content.
2. It makes P2P less appealing, legal content more appealing: See above
3. It serves as a gesture of goodwill.  We punish those who cross us, reward those that are loyal.
4. Keeps "grudge factor" down.  There is a small segment of the population that possesses the technical skill and resources necessary to create very good P2P software.  Let's say one of these people were to develop an alternate program that closed all the loopholes that content providers had been currently using to identify infringers.  This would be an expensive setback until alternate means could be found.  In the meantime, content providers would have to fight the spread of this technology, losing money all the while.  The hope is to reduce the number of people who would do this - out of spite, or a sense of being wronged - from the subset of people that are capable of doing this.  Equally important, it serves as a hedge against wide adoption from the consumer base, so that even if a new P2P technology were to come out, the hope is that they will be used to paying what they believe is a fair price for their content.

After that, well, there should be some other innovation that makes these technology specific problems moot.

 

 

 

 

 

 

 

 

A Quickie for all the Classical Music Fans Out There

    My guess is that Prof. Solum is the only classical music fan in class, but most in the class should find this post interesting:

The DVD format is taking over the classical music world, especially opera:

Sales regularly hit 5,000 units, the standard break-even figure for classical CDs, and go as high as 40,000 worldwide, says Klaus Heymann, the Hong Kong-based head of Naxos International. Also, the hard-core classical community doesn't have to wait around for the video companies to finish issuing meaningless Luciano Pavarotti galas before going on to the real stuff.

Once a nightmare of regional formats, DVDs are increasingly universal (look for the "0" in the code box), though savvy consumers still need a specially doctored player to read all codes on discs available on European Web sites.  Disc prices, which range from $10 to $35, are still unstandardized. The Deutsche Oper's Die Meistersinger is $39, but the Australian Opera's better cast sells for as little as $25.

Whatever the reason, even the most expensive DVD operas cost less than sound-only, full-price CD sets[.]  (emph. in orig.) 

My guess is that reasons are: (1) the market is new, (2) the format is unstandardized, and  (3) DVD's must compete against established record labels.  New markets are not as stable or efficient as robust, established markets.  The newness of the market puts pressure on the sellers to reduce prices to pull other customers away from CD's and towards DVD's.  There's an economic term for this that I've forgotten, but essentially, few people are going to buy both the CD and the DVD so the DVD sellers have to offer an incentive enticing enough to convince classical music consumers to break from their traditional buying patterns.

Video: Professor Ed Felten on Technology, Politics, and the Fight to Control Digital Media

Ed Felten, of the Freedom to Tinker blog, is also a Professor of Computer Science professor at Princeton University.

You can watch his lecture (Real Player req.) titled, "Rip, Mix, Burn, Sue: Technology, Politics, and the Fight to Control Digital Media"

The video is entertaining and informative, and well worth watching.

UPDATE (12/21): This post has been heavily edited.  Prior to editing, I stated that Ed implicitly advocated the use of P2P technologies to infringe on copyrights.  Upon receiving comments from both Prof. Felten and Prof. Solum, I realize that my statement was unduly harsh and intellectually lazy.  I could, and should, have simply emailed Prof. Felten for his position on the matter instead of attributing any particular "implicit" view on his behalf.  My apologies to Prof. Felten for any offense I may have caused and my apologies to Prof. Solum for lowering the level of discourse on this blog.

THE FUTURE (as I see it)

I. Peer-to-Peer File Sharing

The big topic, of course, is what will happen to peer-to-peer file sharing. The Supreme Court granted certiorari to the Grokster case, which was expected. We will know what the Court thinks soon enough. But in the meantime…First there was Napster. Then Aimster, Grokster, KaZaA, etc. What does this tell us about the fate of file sharing? It will continue, no matter what the outcome of the Grokster case. Smart people will always find ways to circumvent the law.

The efforts of the MPAA and the RIAA to take the uploaders/downloaders to court will have a negligible impact on the amount of file sharing. Unless the MPAA and the RIAA want to take millions of people to court for file sharing, any law aimed at preventing file sharing will also fail. So what would be a possible solution for the MPAA and RIAA?

The solution is not a legal solution, but a technical solution. Advances in technology occur at a much faster rate than any changes in law. For example, a copyrighted work could contain some kind of program that would cause it to completely degrade upon transfer over the internet. Of course, the people that want to transfer the files will find a way around this, but it is better than clogging up the courts with a bunch of cases. If people want to protect their works from being illegally downloaded, then let them do it themselves.

Personally, I do not think there is anything wrong with file sharing. It helps promote “Progress of Science….” As a matter of fact, I was at a Tower Records store the other day and saw a Wilco CD at the listening station. Wilco is the band mentioned in the Grokster case that has benefited from file sharing. Now that they have hit it big, the sale of their CDs will lead to increased revenue. This in turn will lead to more Wilco musical creations – promoting “Progress of Science and useful Arts…”

II. Copyright Term Is Too Long

The current copyright term of life of the author plus seventy years is too long. I realize that this is done so that the author/creator can enjoy any later acquired appreciation in value of the work. If the work does not appreciate within the lifetime of the author, what is the probability of it appreciating seventy years after the author is dead? Is it really necessary to be so long?

I propose a return to the copyright term of the 1909 Copyright Act, where the terms were 28 years, followed by a 28 year renewal term. Twenty-eight years is sufficient time for a work to realize any value, and if it does not appreciate in the first 28 years, then the author can renew the copyright for another 28 years. Once the terms are up though, the work will go into the public domain where others can use it and promote “Progress of Science and useful Arts” by developing other works.

III. Intellectual Property Will Live On

The concept of intellectual property will continue to grow. This may be a cynical view of humankind, but man is driven by greed. Just look at the justification for the Constitution’s patent and copyright clause. The grant of a monopoly to the inventor or author is done as incentive for that person to create and/or invent more things. While I do not think there is anything wrong with this, it just underscores the fact that mankind is driven by greed.

However, there are still a number of people who create and/or invent for the sake of just creating and inventing. Those people are academics – the ones who pursue their subject/craft in order to better advance that specific science.

There are also just situations where there is a need to generate revenue. Having been a chemist in my past life, sometimes licensing fees associated with patented technology were what kept the research group afloat. The revenue generated could then be reinvested so that more discovery and/or creation could take place. This just goes back to the primary justification for the Constitution’s patent and copyright clause. The limited monopoly is just a necessary evil.

The Court isn't the answer, so what now?

As a busy year in the world of digital copyright comes to an end, we have one big question.  Where to go from here?  We have seen failed attempts at legislation (the Induce Act), renewed attempts to go after end users as criminals (the MPAA joining RIAA in lawsuits against downloaders), the decline of some older technologies (Kazaa), and the growth of others (eDonkey, BitTorrent). 

[Oh wait, this just in… maybe BitTorrent is on the decline now too, at least for pirates.  Perhaps with the strengthened name recognition gained from *gasp* pirates, BitTorrent will become more of a widespread tool for legitimate purposes.  Maybe 2005 will be the year that people start to really see P2P as a legitimate non-infringing technology and not simply as having potential but with little actual non-infringing use.  It’s sure to come in time, just like the once-pirate technologies of radio, recorded music, and the VCR ended up being accepted in the  mainstream.]

One question that so many observers seem to think of as THE big one going into 2005 is the Supreme Court’s decision to hear the Grokster case.  Such a high profile case going to the highest court in the land sure does seem like news, especially to those of us who concentrate on the interplay of law and technology.  I thought the case was a big deal too.  But I’ve been thinking some more, and the question that I keep coming back to is this - 

Does the Supreme Court’s Grokster decision really matter very much at all?

If the Court rules for the content industry, it’s just the beginning of another cycle.  Maybe we push P2P infringement further into the underground for a while, but sooner or later the general public will catch up to the new technology learning curve and we will have the same problems again with a newer technology.  Perhaps widely used encrypted anonymous filesharing will be the hot button issue of 2006.  And regardless of what our Court decides, 15 year old hacker kids in Scandinavia aren’t going to change their ways just because Uncle Sam says so.  Even if the content industries win they’re just buying time until the next big threat, and the development cycle for threats to the content industries is awfully short these days.

Suppose the Supreme Court decision comes out the other way.  OK, so what.  The multi-billion dollar industries aren’t just going to admit defeat.  They’ll pay off some politicians, pass some legislation, and be on their merry way. 

The real question to me seems to be how to make P2P work as a business model.  No one really wants P2P to be destroyed.  The technology isn’t what the mega-corporations really hate.  What they really hate is that that it has so much potential to make money and they don’t control it.  After a bit of kicking and screaming about not getting their way, these companies will roll up their sleeves and get to work on innovating so that they can make some cash off this stuff.  (Doesn't that sound like the internet in general?  It started out more like a wild untamed frontier, and now it's becoming nothing but a pretty digital face for good old fashioned crass commercialism.)

First of all, in order to work, the P2P system has to be more appealing than the alternatives.  Even if the alternatives are free, they aren’t necessarily better.  A number of factors go into consumers’ decisions, including price, convenience, ease of use, marketing/image, and the law.  There is no magic solution.  Nobody is going to come up with the perfect law to prevent IP “theft”.  The real battle is to get consumers to weigh all of the factors and decide that the most efficient decision also happens to be a legal one.  Right now, the content industries haven’t innovated enough and the average consumer finds it fairly easy to use the illegal alternative.  Bad combination.  The industry has to combat that problem, and I see two keys that should work in tandem:

1.  Ally with consumer electronics.  People don’t mind migrating to new technologies – records to tapes to CDs, VHS to DVD, etc.  New hardware can even be backwards compatible, so consumers can use their old discs (Sony’s Blu-ray standard seems to follow that ideal).  Add DRM or copy protection to new hardware and compatible media.  You can’t really protect what’s already out there, but the media companies already know that old stuff doesn’t make them their money anyway.  Protecting the already-released Spider-Man 2 from piracy is now close to impossible, but that shouldn’t stop the rights holders from coming up with a new way to protect Spider-Man 3 and 4.  You won’t be able to stop piracy altogether, so get rid of that thought.  There will always be someone who just gets a kick out of defeating protection schemes.  However, hardware can make it more difficult for the average users to infringe, if only for a while.  While the average users are slowed down from rampant copying…

2. … shift priorities toward high quality electronic distribution.  Make a really good system for acquiring content – easy to search, easy to use, affordable, fast.  Perhaps use a two pronged sales approach – a la carte or subscription.  Cheap, high quality, easy to use single downloads (iTunes model) for those who don’t want to sign up as a subscription.  ALSO, a subscription model.  Ally with ISPs and tech companies (Google, Microsoft, AOL Time Warner).  Cable companies might be a good ally, because the cable industry is looking for an edge too.  Comcast is losing subscribers to satellite, so it has to try a little harder at selling high speed internet service.  What if that the cost of internet service was $50 a month, but the service came with unlimited downloads or streaming audio from the catalogs of the RIAA members?   Perhaps $6 every month goes straight from the ISP to the recording industry.  It’s a win-win situation.  The ISPs have their “killer app” in free, legal digital content.  The industry gets a nice revenue stream.  The consumers get lots of content for a low price. 

Don’t forget cell phone technology.  One interesting aspect of this area is that the media companies are getting stung by the comparatively poor mobile service we have in America when compared to Europe and Asia.  We are a couple generations behind on our wireless standards, at a time when advanced wireless could play a vital role in creating a new product that people really want to use.  The ability to play the entire catalog of Sony Music on your cellphone sure would sound nice to a lot of people.  Just plug in your headphones and you have an iPod without needing to download songs or rip music.  Oh yeah, and this little device also lets you surf the internet.  Oh, and it makes phone calls. 

The players who stand to lost the most in the future might be the major music labels.  After all, they are really just middlemen.  Artists don’t need a label to create music, and distributing that music is becoming easier by the day.  If a truly high-quality and high-profile digital distribution system is put into place (let’s say by Google), artists can deal directly with a distributor who can give them a better cut, rather than the artist exploitation that goes on with today’s outdated label system.  If a band needs publicity, they can hire a marketing agency for a lot less than they have to give up to be on a big label today.  What’s a label to do?  I would propose that they try to do less selling to the end user and more selling to/partnering with other corporations.  If the RIAA cartel gets together and makes a deal with Google, they might be set.  Rather than try to make a fortune convincing one user at a time to buy a shiny disc, try to partner up with a bigshot tech company and make the best damn digital distribution service conceivable.  How is some next-gen Kazaa really going to compete with the combined might of a Microsoft/MPAA/RIAA alliance?  With a technology shift frustrating the casual would-be pirates along with the combined marketing power and ubiquitous software, most people simply wouldn’t bother with trying to infringe. 

I suppose that’s where I stand now.  I’m rejecting the idea that the courts or the legislature have any say in the solution to this problem.  The people who have the ability to make the ultimate decision are the consumers.  Content industry – make your option more attractive to the people who have that power.  I’m not saying to give up on trying to use the courts or to stop creating DRM lock-out schemes.  Those things have their place.  But all those things are really doing is making piracy a little more frustrating for users.  Eventually the public will overcome it, the content industries will counter, and the cycle will repeat.  Make a good alternative to infringing and the cycle that repeats will become smaller and smaller every time because consumers will not think it’s worth trying to beat the system. 

The Future will Require Consistency

Right now the biggest hurdle is all the inconsistent methods that are being used to try and solve copyright issues. Daily new technologies come out with different yet incompatible methods to try and solve it. Additionally, new methods of enforcement are being used just as often as well. The result: 1. most people are either confused on what is illegal/legal, 2. they do not understand the different technologies, or 3. they simply do not care since there is no clear cut guidelines.

 
The future will come down to companies finding a standard method of enforcement. Whether that method is through new technology or through legal methods. In my opinion, the solution will have to be one of legal methods for three reasons.

 
First, with all the new technological solutions, the losers are the consumers who must pay higher prices to pay for the research and development that is required to develop these new technologies. At some point consumers will figure it out and stop paying.

 
Second, hackers/piraters will always find a way to break new technology. It may slow down a few people, but in the end they always mange to find a way around the system eventually. Even if it is just for the pure challenge of beating the system.

 
Third, it is cumbersome and inconvenient. Many of these systems require the user to go beyond the normal steps to use their media and people will just grow tired of it. For instance, I recently installed a copy of Windows XP which required me to call Microsoft and read a very long number off the screen, then type a similarly long number back into the system. The whole process took about 20-30 min just to "activate windows" (which is Microsoft's method in Windows XP to counter piracy).

 
Therefore the only solution must be with some sort of legal enforcement which actually convinces people to stop. Maybe a harsh and strict rule, but a method that is consistent across the board is the most important factor. Most people then at least will pay attention resulting in comprehension of the rule and actually adhering to it instead of just ignoring it. Hopefully at that point breaking copyright laws will be as obvious as speeding.

There was more than one horse in the barn!

        We've heard repeatedly that "the horse is out of the barn."  This phrase is used to refer to the proposition that because P2P and Internet technologies have such a large adoption rate, and are so easy to vary, any technology-based attempt to prevent infringement are futile.  This should not be taken as fact though, it would be possible to regulate at least domestic infringement if Congress were to adopt some extreme policies.  One easy way would be to impose a duty on every ISP to ensure that no copyrighted materials travel on their network except via a specifically authorized port requiring prior notice to the ISP.  From a realistic perspective, this is unlikely to happen, we can throw the phrase around w/o consequence.

    However, that's only one of the horses.  If our end goal is the prevention/reduction of copyright infringement, we can extend the metaphor a bit further.  The horse that hasn't quite made it out of the barn is the social norm of paying for music.  P2P has only been around for 6 years, and it's high popularity has probably been the case for only the last 4 years.  I was 11 years old when I made my first music purchase (Gun's n' Roses, Appetite for Destruction - laugh away!).  Using Kaus's Theorem (I'm not unique, many people must be like me!), we'll assume that people generally start buying music around 9-13.  People who illegally download music today have most likely been doing so for only 4 years or less. 

    Music consumption, at least prolific music consumption (not necessarily purchase), typically occurs during the adolescence and early adulthood.  Record companies are under pressure because they recognize that it's not too late to re-socialize current P2P infringers to the norm of paying for music.  My concern is that the passage of time, coupled with a weak response from record companies during this time, will cause a generation of potential customers to believe that music should be free.  They will never, or only rarely, experience the act of paying for music, and in turn, will come to think of music as a free commodity rather than a valued good.

    This is the horse that really matters.  Perhaps you can accuse me of 20/20 hindsight, but I never thought that the solution was going to be purely technology-based.  More realistic would have been a government mandated technology standard, but fortunately, the CEA has successfully kept that "solution" at bay.  Software (P2P technology) is essentially information, and when coupled with the Internet, the result is a viral technology that is near impossible to stop.  We haven't been able to stop the distribution of strong encryption programs, a tool undoubtedly used for terrorist communications.  Likewise, we were unable to stop the dissemination of our nuclear secrets, which is arguably more important than copyright infringement.

    We must remember that any government attempt to hinder the development and spread of "bad" technology while enabling the growth of "good" technology is likely to have unintended consequences.  This is because government only has blunt tools at it's disposal; the Betamax case should offer easy proof.  That is a slippery slope not worth traveling down. 

    Technology has transformed our lives, mostly for the better.  It has enabled us to do great and terrible things.  The 9-11 hijackers went to travelocity.com in order to pick flights that had a low number of passengers so that they could more easily control them.  Travelocity provides real time data on passenger loads.  Good for us when vacationing, but good for terrorists also, when planning an attack.  Yet no one blames travelocity, and rightfully so. 

    The Internet was originally created so that our defense networks could continue to communicate with each other in the event of a nuclear attack.  In its early incarnation, it was a four node network between four universities, and primarily used by academics to collaborate on projects.  No one foresaw the tremendous potential the Internet held, and that is to be expected.  We shouldn't hinder the development of certain technologies simply because of how some choose to use it.  We should punish the act, not the technology.  When someone is murdered in a shooting, we don't punish the gun. Oh, wait...

The Roots... of Copyright

 Greenbag, self-described as "an entertaining journal of law," has an interesting article titled, "Constructing Copyright's Mythology" by Thomas Nachbar, Associate Professor of Law at the University of Virginia.  PDF file also here.

Nachbar provides some historical perspective on copyright law, including several interesting facts:

1. Noah Webster, of dictionary fame, was an very influential member of a small group of authors that went from state to state, seeking passage of state copyright laws.  Between  1782 and 1786, they succeeeded in getting 12 of the 13 states to adopt copyright laws.
2. The notion that the Copyright Term Extension Act of 1995, aslo known as the Sunny Bono Act, was somehow "a recent response to intense interest group pressure, which might have suppressed [Congress's] historical Constitutional good sense in the intellectual property context" is false.  Congress has extended copyriight terms repeatedly and consistently.

Nachbar's main argument refutes the proposition set forth in Eldred that copyright "must promote creative activity."  He disagrees w/ this quid pro quo notion of copyright by pointing out that Webster travelled from state to state, lobbying for copyright protection after his book was already published.  This hardly seems like a good argument since the the promotion of "creative activity" could apply to a subsequent work.  Webster could have been promoted to some future creative activity upon the realization that he would be granted a copyright in that work.

In any case, it's an interesting article worth reading. 

Towards a New Copyright Regime: A Modest Proposal

Note: This post represents my proposal for an ideal copyright regime, free of any political considerations with respect to feasability of adoption.  My later post will differ in that I will advocate the use of  certain tactics by content providers, who, on the whole, I tend to support more than those who oppose them.

    "Property, a creation of law, does not arise from value, although exchangeable -- a matter of fact." So begins this post by Prof. Cass Sunstein, quoting J. Holmes in INS v. AP. Although Sunstein’s post is on a different topic, he explains the quote:

“What Holmes is saying here is that even though property is exchangeable, it doesn't arise from value; it's a creation of law. And that's simply a matter of fact.”
…

“Property rights, as we enjoy and live them, are a creation of law; they don't predate law.”

    Like Holmes, I take this as simply a matter of fact. It is the foundation for my proposal so if you disagree, you’ll have to play along for this post to make sense. Property rights, whether in real or intellectual property, are not “natural rights.”  Private property rights (aside from the Crown) is a relatively young idea and practice; the notion of property rights in IP even younger. This proposal is aimed at works that can be digitalized and easily and widely distributed; namely music and movies.

The 2 questions I’ll try to answer are:

1. What is the goal of copylaw?

2. What regime would best further that goal?

First Things:

    The Congress shall have Power… To promote the Progress of Science and useful Arts, by securing for limited Time to Authors and Inventors the exclusive Right to their writings. U.S. Const, Art I, sec. 8.

    Even though this proposal is an ideal one, free from political considerations, I’ve restricted myself from any solution that requires modifying the text of the Constitution. Since we’ve covered this in class, I’ll exclude any detailed discussion. Like real property rights, the goal of copylaw is essentially a public policy argument, “To promote… the useful Arts.” The usefulness, or utility, of a particular work varies depending on the person deriving utility. I find Milli Vanilli’s most recent album "useless" in this sense.  Perhaps you agree...

    In this light, my proposal serves a pure public policy goal, concerned only with maximizing overall utility.  While imperfect, I offer the free market system as the best mechanism to measure the utility, or value, of any particular piece of IP.  Simply put, the goal of copyright law is to make the most money possible for society as a whole.  Of course, we have to take into account fairness norms; we couldn't, for example, revoke someone's copyright simply because we thought they weren't maximizing the utility of a particular piece of IP.  In this sense, the proposal should greatly reflect the society's current notion of private property (and IP) as a natural right.

    We’re limited in our means: “securing for limited Time to Authors and Inventors the exclusive Right to their writings “

    Implicit in the text is the notion that a grant of exclusive right in a work – essentially,  the exclusive right to profit from ones labor – is an incentive that encourages the production of more “useful [a]rts” by society as a whole. This gain must be balanced against the lost potential gain the public bears for the duration of the copyright.  For example, George Clinton may have written a song back in the 70's that is no longer sold anywhere.  The Backstreet Boys may want to sample a riff from that song in order to create a new, hit song.  Clinton could refuse to sell the right to sample that riff, even if offered $1 million, and society overall would be poorer for it.  Following my proposal to an extreme conclusion, the governement would be authorized to rescind the right of exclusivity from Clinton and grant permission to the Backstreet Boys to use it.

    But this is an individual case, and even though we don't behave rationally in every instance, on the whole, the market behaves both rationally and efficiently.  Most people could be offered some price that they would agree to so the fact that there are some instances - and there always will be - where the market is not efficient does not show that the overall market system is inefficient.

    My argument is that an exclusive right to profit, for a limited time, from a piece of IP is the regime that would best serve the goal.  The time should be limited to 70 years from the time of creation (roughly one generation), however, this is not to be applied retroactively.  I support this long duration because certain works and brands possess great value and reflect a substantial investment on the part of the copyright holder.  Disney holds copyrights to their many characters and their movies, which they have invested a substantial amount in.  Protecting their ability to profit from this work is in society's best economic interest - unless you believe that society at large would be better able to generate revenue from Disney's copyrights.

    Registry: There should be a registry of all works copyrighted, more to serve notice to potential infringers than anything else.  However, the registry should be free, much like the "Do Not Call" registry.  This is to prevent an undue burden being placed on individuals who create IP.

It's Question and Answer Time

Over this past semester, our class has been discussing an area of law (and culture) that is in flux, with many new developments actually taking place during the semester, and many more yet to come. We were left with unanswered questions and no foreseeable solutions. With all these unanswered questions, I decided I would do a little question and answer session with myself ... interview style. So here it goes:

1) Will Congress intervene with new legislation aimed at thwarting p2p networks? Probably not in the immediate future. The failure of the INDUCE Act made it apparent that it will be difficult for the content industry and the electronics industry to reach a compromise. It is possible that Congress may try to pass a bill designed to eliminate "illegal" p2p networks if the Supreme Court does not rule in the content industry's favor in the Grokster decision. However, any potential legislation is not likely to be successful because it will fail to effectively stop p2p file sharing, but will probably have a chilling effect on innovation. I feel that we must find potential solutions that do not obstruct innovation or creativity.

2) Are intellectual property rights really necessary in order to provide incentives? Yes, they are. And I posted about that here.  Many scholars have argued for less copyright protection. The content industry has, of course, argued for more. I feel that we do not need to further extend the protection already conferred to copyright owners; instead we should focus on just how much protection is necessary without losing any of the incentives to create. I certainly feel that the Sonny Bono Act has extended copyright terms well beyond the length of time necessary for the requisite incentives. Many copyrighted works are abandoned or unused after only a few years and not allowing them to enter the public domain means these works essentially go to waste.

3) So just how long should copyright terms be? I don't know if there is an ideal answer for that yet, but I do like the Posner/Landes idea of a copyright registry with renewable terms. However, I do not think that the original author, or his/her heirs, should be able to renew the work indefinitely. I think an initial term of 20 years, plus one renewable term of another 20 years is sufficient. Thus, the work enters the public domain after either 20 or 40 years. I recognize that congestion effects are a potential problem with works that become available to the public. But seriously, after 40 years? I can't think of any work from 40 years ago that, if it entered the public domain, would suffer from congestion problems. There is just too much other content out there for people to focus that much attention on one work. Further, I don't think that placing the rights to the work in the hands of the author's heirs (or assignees) will necessarily bring about the most efficient use of the work.

4) So what does the future hold? The use of file sharing networks is going to continue to increase, especially as newer generations get introduced to the instant gratification of downloading free music. Some studies have reported that the introduction of p2p networks has increased music consumption, and contrary to what the content industry would like you to believe, has not hurt music sales. While music consumption may be up, there is no question that there are people out there who just aren’t buying CDs, but are downloading a significant amount of "pirated" music. This is hurting the content industry and its only going to get worse. Inevitably, the content industry at some point will have to absorb the blow and will be forced to scale back somewhere, and my guess is that it will not be in executive compensation. Instead, it will hurt content, as less money will be invested in new artists, and much of the money going to new artist development will be poured into those artists that are more “main stream,” and more likely to have higher record sales.

5) Is there a solution in sight? As our class has seen this semester, there is no quick and simple solution to the fine mess we’re in. It's not going to happen. You know it is bad when even Orrin Hatch cannot solve the problem. The Grokster decision could be, at the very least, a moral victory for the content industry if decided in their favor; but how much of an impact will it really have? In reality, p2p networks can still exist without any actual organization running it. With p2p protocols, the networks can still exist in a virtual sense. These type of networks are difficult to police or regulate, and once one shuts down another can go up immediately, and we’re back to square one.

6) What about vertical integration? In class we discussed the possiblity of the the ISPs becoming immensely powerful corporations, while the content industry dwindles to such a degree that eventually the ISPs buy them out. With the ISPs in control of the internet service and the content, they can effectively shut down file sharing networks and bring back the content. However, I don't foresee this as a possibility. With the content industry having the resources and capital that it currently has, I think it is much more likely that the content industry, if desperate, will band together and pay the ISPs to eliminate the p2p networks before such a "buy-out" can occur.

7) What about criminal sanctions? Criminal sanctions are one solution that has a real  possibility of stopping illegal file sharing. Then again, we could also effectively deter most people from speeding with criminal sanctions. Is this something we want? I don't think society is ready to label file sharers as "criminals" (an important point to consider before instituting criminal sanctions). Additionally, I don't think that locking up kids for sharing their music is going to have any beneficial result. There is also the difficulty of actually policing this sort of thing: will there be enough enforcement to effectively deter? And do we want to spend up law enforcement resources in this area? Some like to compare it to stealing a CD out of a music store, but I still feel a significant distinction can be made based on the fact that, with file sharing, no one is actually being deprived of personal property.

8) So what should the content industry do now? Lower their prices. Don’t fight the new technology, work with it. The content industry should try to take advantage of the immense popularity of mp3 players, along with the capability of storing digital music on hard drives. And they can do this by lowering their prices. Not very many people (especially college-aged people or younger) are willing to pay 99 cents for a song from a “legal” network like ITunes when they can get the same song for free from Kazaa. However, I think many of those same people would be willing to pay say 25 cents for a song if they’re able to get the added benefits of quality, convenience, and legality. Likewise, consumers may be more willing to buy CDs if they are sold at a reduced price, i.e. $5.00. If prices were to be lowered, the industry of course loses the profit that could have been made from those consumers who are willing to pay the current prices. However, the consumers willing to pay those amounts will continue to decrease, and it could cause the industry to collapse. So why not take the hit now, but potentially save the industry’s future? Granted, with price reductions, the industry will have change some of its practices. They will have to cut back in certain areas, perhaps promotions, and possibly even salaries (although they may be able to save some money by distributing the majority of their music digitally). But is anyone -- other than the industry itself -- opposed to this? Seriously, not every rapper should be able to afford their own record label. I -- for one -- don’t think the industry making less profit will be such a bad thing. The demand for content will always be there, and the industry will find a way to meet that demand, even if it means slightly less money for those involved. Or at least that is how it should be.

In the end, we have learned that their is no simple solution. No one really knows where this area of law is headed. However, reaching this anti-climatic result has been a thoroughly enjoyable journey for me.

Where Do We Go From Here?

The future of copyright is no big mystery.  In fact, it is quite clear, and can be easily summed up with four simple words: uncertain and very problematic. With obvious sarcasm aside, the question of copyright’s future is a very troubling one; one that has been known to frustrate many an individual and, in some instances, create dispositions bordering on insanity.  Nonetheless, in this post I will attempt to summarize where I believe the future of copyright can and should be heading, focusing particularly on the music industry’s conflict with peer-to-peer file sharing, which appears, for now, to be the most troubling issue affecting copyright.       

To understand where the future of copyright is heading, one first needs to have an understanding of where it has been.  The framers of the Constitution intended for copyright to be used as a means to “promote the progress of science and the useful arts.”  The intention was to create an incentive for individuals to pursue endeavors in these fields, by offering the creators of such works exclusive rights to copy and distribute their creations (copyrights).  However, the music industry has since come to revolve around large companies known as record labels, to which the original creators of such works assign these copyrights.  These entities, with their corporate muscle and global reach, represent an ability to exploit the power of copyright in a way the framers probably could not have imagined.  As a result, the evolution of these entities created an industry where finding enough incentive for individuals to create music was certainly not a problem.  For a long time, life was very good for content creators (artists) and providers (labels), and if there was any problem at all, it was perhaps that the incentive to pursue this creative practice had become too great. Consumers found that they were being held somewhat at ransom, while the music industry was making a fortune off of content that was often criticized for both its quality and its price. 

That is, until a young man by the name of Shawn Fanning created Napster, introducing the world to the phenomenon known as peer-to-peer file sharing (P2P), and forever changing the face of copyright and the entertainment industry.  P2P, which was made possible by the development of the internet and digital technology, allows individual users to copy and (essentially) distribute copyrighted material without obtaining any authorization from the rightful copyright owners.  Although Fanning’s original creation of Napster has since been shut down, it opened the door for the development of many new P2P services, which have thus far managed to avoid the long-arm of the law.  Currently, there are over 6 million P2P users in the United States alone, meaning there are a lot of people who the music industry has lost the ability to sell music to. 

The music industry is, understandably, not too happy about this, and has spent the last several years employing various attacks, aimed at different opponents, in an attempt to counter the effects of P2P.  They have filed thousands of copy infringement suits against both individual P2P users and the distributors of P2P software, but neither has proved very effective at slowing down P2P.  Although the suits against individual users have almost all ended in the industry’s favor, the costs of bringing these suits have simply proved too large to allow the industry to make any kind of significant dent in the pool of 6 million users (think of these suits as the equivalent of taking a bucket of water out of the ocean).  On the other hand, the problem with bringing suits against the P2P distributors is that such cases have not all resulted in the music industry’s favor.  Although the industry did experience some early success with cases such as Napster, more recent decisions, such as Grokster, have failed to hold the distributors liable as contributory infringers.  Furthermore, attempts at finding legislative solutions to the problem have also proved unsuccessful, due largely to Congress’ reluctance to disregard the technology industry and the music industry’s reluctance to compromise their broad proposals. 

However, there are many who argue that even if new legislation were passed, or if the Grokster decision was overturned, the P2P problem would still not go away.  This argument rests on two basic ideas: [1] the “horse is out of the barn,” meaning that the software is already in the hands of users, out of the control of the distributors, and thus beyond the reach of any reasonable means of regulation; [2] the internet, itself, is essentially one large P2P service, so P2P will always occur as long as the internet exists.    

If you accept either of the two arguments in the last paragraph, or simply that the music industry can’t stop P2P for the reasons given in the paragraph before the last, then you begin to understand why so many music industry people are feeling, well, let’s say insecure.  Under the current structure, P2P represents the ability to completely wipe out the music industry as we know it.  If the phenomenon is not stopped, it is not too hard to imagine a time when no one will be willing to pay for music, a situation which would return copyright to its initial position of needing to create some incentive for individuals to pursue the practice of creating music. 

Thus, many have suggested that since stopping P2P is not an option, the only available choice the music industry has is to develop some alternative system that embraces and accepts the role of P2P.  Of these alternative models, two of the most prominent are the “creative commons” and “musical socialism”.  However, neither of these alternative systems appear practical to me, for reasons which I cannot discuss in great detail here.  However, I will say that the bottom line appears to be that in order to implement any new system, its benefits would have to outweigh the costs of maintaining the current system, by a substantially great amount.  This is because many years and many livelihoods have been invested in developing the system we currently have, and to overturn it would be an extremely costly endeavor.  In order to undertake such a task, the alternative system would have to offer seemingly no drawbacks and the current system would have to be utterly desperate for reform.  To this point, neither the proposed systems nor the current system fulfill these requirements, and thus, it appears that implementing a drastically new system for copyright in the music industry is not a practical alternative.   

So, does this mean that copyright and the music industry are inevitably doomed by P2P?  Well, it may, but personally, I’m not ready to concede that just yet.  The main reason why is because I don’t necessarily agree with the arguments painting P2P as an inevitable force that cannot be stopped or controlled. 

First of all, I believe that distribution of P2P services can be halted, either by legislation or by an overturning of the Grokster decision.  If the music industry could compromise their aspirations and propose legislation that simply required P2P services to implement a central control mechanism that checked for authorization of transferred files, I believe that the technology industry would have no justifiable reason to object and Congress would be willing to pass it. Alternatively, this same result could be achieved through an overturning of Grokster, if the Supreme Court chose 1 of 2 routes: [1] The court could apply the “substantial non-infringing use” defense established by the Betamax decision, but hold that the non-infringing use that P2P is capable of is not “substantial”; [2] The court could reject that approach, finding that P2P is a problem involving sharing (and not just copying), and create a new standard for sharing which would require central control mechanisms. 

Secondly, assuming that P2P distribution could be halted by one of the means above, I am not ready to accept either the “horse out of the barn” argument or the “internet as P2P” argument as justifications for failing to do so.  Although users would still have the P2P software on their computers, it seems to me that there would still be ways to curtail its use.  One option would be to involve ISPs in the attempt to police use of unauthorized P2P services; a plan that would possibly involve shifting the costs of such efforts from the ISPs to the content providers.  In addition, the simple fact that these services would no longer be monitored and updated by their distributors would ultimately lead to their ineffectiveness.  Also, I believe that the power to create is ultimately the power to destroy, meaning that since we were able to design these P2P networks, I am not willing to concede that we cannot develop a way to control and destroy them, if given the authority to attempt to do so.  And finally, the argument that the internet is P2P, so P2P will always resurface, does not justify, to me, the stance that we should not attempt to fight P2P in the form in which it currently exists.  Although the “internet is P2P” argument certainly may hold some validity, it does not justify turning a blind eye to the current problem, out of fear that the immediate solution might someday be undone by the surfacing of a similar problem in a new form.  Until a viable alternative to the current structure of copyright in the entertainment industry arises, we have a duty to those who have invested their livelihood in the industry and to the integrity of our legal system, to enforce the laws, as they exist, to the maximum of our capability.  This requires us to fight the illegalities of P2P. 

Finally, I will conclude by saying that if my opinion does not win out, and P2P does prove unbeatable (or we simply decide not to try), the music industry will not certainly be doomed.  Although the music industry’s coexistence with P2P seems less than promising, it is may not be inevitable that P2P ultimately equals death to music.  For example, it may be possible that P2P can simply cut the fat off of a formerly inefficient industry, causing entities, such as the record label, which were once needed but are now less imperative, to become extinct, and placing the focus of copyright on the original creators, as the framers had intended.  It also may be possible for some sort of vertical integration to take place among the P2P distributors, the ISPs, and the content providers, by which all three could coexist.  However, I do not believe that the existence of these possibilities justifies a failure to enact our laws to the maximum of our capability, as long as they are the controlling laws on the books. 

P2P may prove to be a force that will ultimately cause the music industry and copyright to fundamentally restructure their make-up.  However, that is not yet where we are at today, and until we are, we have a duty to fight P2P by all means reasonably necessary.

Final Thoughts

"Publishing is a very ancient and crafty industry that existed and flourished before the idea of copyright even existed. When copyright came into existence, the publishing industry dealt with it and moved on. My suspicion is that everything that's been going on lately will amount to a sort of fire drill that will force publishing to scurry around and make some new arrangements so that they can get back to making money for themselves and for authors."

- Neal Stephenson, author.

So What Now...

The majority of my posts throughout this weblog have commented upon the music industry. More specifically the distinction between corporate and independent music labels in how they choose to deal with digital file sharing programs and the companies that own and operate them.

It is abundantly clear that mass populations of people utilize these services to illegally trade copyrighted recorded music. According to an article in USA Today, almost 7,000 law suits have been filed since 2003. Despite the risk of prosecution people continue to engage in illegal file swapping via these peer to peer internet services in large numbers. Within the music business there are two ways to approach this dilemma, embrace the new medium as a means of vast distribution, or fight it with everything you’ve got. Most independent labels have chosen the first option, most corporate labels chose the second. As I have commented on in several earlier posts in this weblog, independent labels and bands have been working closely together with these peer to peer services for years now in an attempt to distribute this lesser known music on grander scale than any independent label had previously thought possible.

The argument has been made that many people simply sample music by downloading it, and if they enjoy it, they will purchase the album. After all, the music market is rather saturated with new bands all claiming to be the next Beatles or Nirvana, and personally I would rather hear the album a few times before paying 16 dollars for something I may end up using as a coaster. However, there are also many users who simply use this service as a means of avoiding the cost of purchasing music altogether, supposedly costing the industry millions in lost revenue.

One of the main goals of having a system of legally protected intellectual property is to foster creativity by creating incentives for people to expend their time and resources in researching and developing things that could later be easily reproduced at a much lower price once conceived of and worked out. It takes a great deal of time and money for a band to write and rehearse all the songs they choose to record, and a great deal of money for the label to pay for all the studio time and engineers. Yet digital file sharing allows for near free distribution of such music, costing the label revenue from those who would have otherwise purchased the album.

So what is the industry to do about this copyright dilemma? These people are clearly violating the law, and many are now being charged with civil liability for their actions. Criminal prosecution has some potential for major deterrence, however social outcry may be too much for politicians to handle. "Musical socialism" seems like an attractive alternative at first, but what happens when all consumers become downloaders, how high will the taxes climb on playback devices? Water marking the CDs is another possibility, however, the analog hole and determined hackers could very well undermine this system. The Induce Act had potential to change things by holding these peer to peer services liable despite their lack of certain knowledge as to what end the users are utilizing their programs. This, however, never came to fruition. Things are looking rather dim for the preservation of a rule of law for intellectual property that can be digitized and instantly reproduced as well as distributed.

Looking back again at one of the main goals of copyright protection, to encourage new and innovative works, those who benefit the most from the current system are often not the authors of these great pieces of music. Rather, it is the labels. With the exception of the top selling acts, most musical groups make little to nothing from CD sales. The majority of this revenue is split between the record label, the publishing company, and any other middle men involved in the process. On average a band receives around 10 to 50 cents per album sold. More often than not bands never even see a dime of this money; they are indebted to the label for the cost of production and promotion of their album. This money will be paid back to label via revenues from album sales. Most bands earn a living by touring, playing live shows, and selling merchandise. There is no digital file sharing that can convey the energy and excitement of a live show. So for a majority of bands currently in existence and able to play, the incentive for creating new and innovative music still exists. For many bands who have never broken into the top 40 mainstream of radio and MTV this illegal distribution of their copyrighted music has given a major boost to their fan base. Individuals are now capable of downloading music by lesser known artists instantly and without paying much of a price. They now have access to melodies they would otherwise probably never have heard. These same individuals may become fans, leading them to purchase tickets to shows and/or merchandise from the band. A much larger portion of these revenues go directly to the band, giving them far more financial support. In this sense the dissolution of adherence to our current system of copyright protection has arguably aided in the success of many of these bands. Without such widespread, yet infringing, distribution of their music it is completely possible that these bands would not have as large and diverse of a fan base as they do.

Were we to adopt the idea of "musical socialism," perhaps a surcharge on top of the price of every concert ticket could be collected and added to the pool of revenues collected from the taxes on playback devices. This could help alleviate the heavy tax burden on such devices and ensure that dedicated music fans are paying more into this pool than the occasional listener. But of course implementing this system at all would require a revamping of our entire system as it currently stands, a daunting task.

Should a system of "musical socialism" prove to be simply unworkable, the fact still remains that many bands stand to benefit from the unlicensed distribution of their music through these peer to peer services. I spent the summer of 2004 interning at SideOneDummy Records, a rather successful and rapidly growing independent rock label. In a past post titled "More on An Independent Perspective," I discussed the issue with the head of P.R. and advertising for the label. He is also the lead singer for a band that had some large commercial success in the late nineties, Buck O’ Nine. He acknowledged the fact that these services have caused a bit of a drop in album sales, but they have done wonders for the dissemination of the music created by these bands. This in turn leads to more ticket sales.

The problem that remains here is the capital needed to record a professional album. This can be astoundingly expensive. As I mentioned earlier, this bill is initially paid by the label, they are then reimbursed through album sales. Without the revenue generated by album sales many bands would have no means of recording a fully produced studio album, and therefore no music to distribute digitally in order to build a fan base that would be willing to purchase concert tickets. Should we decide to adopt a system of "musical socialism" labels could be paid through the revenue pool made up of the taxes from playback devices and concert tickets. Or labels may resort to taking a large portion of the revenues from concert tickets in order to make up for all the lost profits due to a lack of CD sales. Again this would likely lead to a rise in the price of such tickets.

These ideas and comments are only applicable to the contemporary music community, where live performance is common and a large portion of the business. Labels would loose large revenues from all their old and retired artists who still sell thousands of albums a year yet are unable or desire not to perform publicly. This method would also be inapplicable to DVDs or any other copyrightable subject matter where live performance by a specific group is not a large part of the industry.

Mend It, Don't End It

Despite all the possible alternatives to the current copyright system that we have discussed this semester, no one proposal stands out as holding promise for the future of copyright.  There is difficulty in finding an alternative system that allows authors to have their constitutionally guaranteed incentive and at the same time allow for the maximum public benefit.  With ever changing technology the enforcement of copyright law is becoming more and more difficult.  In addition, the mainstream view of most media downloaders is that they are not really doing anything wrong.  This makes it terribly unpopular for copyright holders to enforce their rights by using the courts and is why we have seen so few cases filed against illegal downloaders.  Without the ability for authors to enforce copyright protection the laws become useless and the incentive for creation ceases to exist.  So what is the best plan for the future of copyright?

I feel that the best chance for the future of copyright is to take the "mend it, don't end it" approach.  The current copyright system is the best available program we have and with the continuing adaptations to technological advances it can provide the incentives and public benefits which are so important.  There are three major steps to working with current copyright law in order to make it effective.  First, copyright holders must use the current laws to there full extent in order to protect their rights.  Next, copyright holders, and in particular their organizations, must work with technology manufacturers in order to incorporate copyright protection into the next generation of media equipment and software.  Finally, legislation must keep up with changing technology in order to protect the rights of authors. 

Copyright holders must use the current law to its full extent in order to create deterrence that will prevent people from infringing activities such as illegal music downloading.  Prosecuting as many violaters as is economically viable will send out a strong message of zero tolerance and will also be a springboard to new legislation.  By using the current law fully copyright holders will have legitimacy when they seek legislative change since they have exhausted their legal remedies.  The view that breaking copyright law is no big deal is pervasive and organizations like the RIAA and MPAA are only letting it continue by not prosecuting as many violators as possible.  To date only several thousand people have been sued by the RIAA and a handful of people by the MPAA.  They are sending out the message that it is acceptable to illegally download media as long as you are not one of the big offenders.  By suing as many people as possible the organizations would send the message that even one illegal download is wrong.  This would drive many of the illegal downloaders off the P2P networks and make them use a music download service which pays royalties.

The next step is for copyrightholders and their organizations to work with manufacturers in order to coordinate copyright protection.  We have seen this work already in several ways.  Many CD players do not work if the CD does not have the proper encryption and it is the same for most new DVD players.  In addition, companies are including protection in their software such as Microsoft and the  copyright protection to be built into its new operating software.  These are just examples of how working with manufacturers can make copyright protection much easier.  Soon all CD and DVD players will have some sort of protection system installed.  As new software and hardware comes out organizations like the RIAA need to work with companies to ensure protection.  This type of cooperation could also be made law by Congress if companies are not willing to comply.  So far it seems that such an extreme is not necessary since companies are voluntarily working with copyright holders.  With technology companies working with copyright law it will be less necessary for Congress to intervene and adjust the laws.

The final step in mending current law is for legislation to keep up with the changing technology and its effects on copyright.  We spent a lot of time talking about recent copyright laws like the DMCA and potential laws like the Induce Act.  These are two excellent examples of how legislation can try to keep up with the changes.  Even though the DMCA is not perfect it offered some new protections to copyright holders.  The Induce Act is greatly influenced by the copyright organizations and the potential drafts seem to favor their rights.  Congress is clear that it will pass laws that will protect the current system and does not seem to support a major overhaul.  As long as Congress continues its dedication to protect copyright holders they will be able to adjust the current copyright law to work with the changes.  This makes the system flexible and able to change if copyright law becomes too weak or too strong.

There are many things that are uncertain about the future of copyright, but one thing that is clear is that new innovations like P2P networks are here to stay.  Copyright law has to adjust to these new changes, or be buried by them.  Declining CD sales are one tangible way to show the effect of letting people get away with breaking the law.  If we want to enjoy the level of creativity that has lead to so many movies, songs and art we must be willing to give up the easy and free ways to violate copyright laws.  And if we are not willing, then copyright holders must force us too in order to protect our system which fosters creativity and public benefit.      

A Look Ahead - Copyright in 8 Years Revisited

I began this semester commenting on a list compiled by University of Virginia Law Professor Timothy Wu that explored several possibilities of where copyright may be headed in the future.  The list contained six theories, all of which have been better clarified through discussions and posts during the semester. 

First, Professor Wu wonders if copyright will be primarily a criminal regime; it seems as if criminal punishment is thus far the only effective means of dealing with copyright infringement, and even then it lacks a "fear factor" that is necessary to enforce - and put a stop to - copyright violations.  There is no real threat of being punished! Unless you are the one in a thousand net user who is hording millions of MP3 files on your personal computer, the chance of being caught for having downloaded a couple of your favorite songs is slim to none.  Earlier this year, I noted that the time and money of our law enforcement agents and taxpayers is not best spent fighting to protect copyright law, and I still stand by that statement.  However, a "criminal regime" might be the only effective way to end copyright infringement in the future, provided an improved method of identifying and prosecuting infringers becomes the norm.

This incorporates the next item on Wu's list: a focus on control of the hardware and software to prevent infringement.  Rather than relying on the government to locate infringers and prosecute them (and finding each and every infringer, considering the broad definition now applied to the term, is impossible), it would be a much simpler and more efficient means of law enforcement to incorporate the anti-infringement technology into the copyrighted item itself.   I commented that this proposition seemed impossible considering the rate and which hackers can always find ways to "crack the code" and frustrate copyright law.  However, if copyright technology can always stay one step ahead, and continually improve itself, it can actually frustrate the hackers, rather than the other way around. 

The idea of protecting the revenue streams of DVD's, CD's, software CD's and video game CD's and nothing else is completely unrealistic.  This is not the direction copyright is headed.  If nothing else, this semester has taught me that technology is constantly improving, and what was the latest and most modern item today is obsolete tomorrow.  Copyright cannot focus on protecting technology of the past - it must focus on creating technology of the future.  A backwards looking future will only result in copyright falling out of step with all the possible means of infringement.  This falls in line with my beliefs from the start of the semester - it seems inevitable that something bigger and better will be on the market in 2012 making all of the above items nothing but a memory.  And those items are what copyright law should be looking to protect. 

Alternative compensation systems outside of the United States is an idea that is hard to side with, one way or the other.  It certainly does not seem a realistic future for copyright, however.  Compensation is the ultimate reason we are so strongly opposed to copyright infringers - people who steal music, movies and video games off their computers while leaving the creators of such mediums without their expected profit.  While this is a problem and will most likely continue to be so in 8 years, several artists have come to terms with file sharing and have embraced it, rather than fought fervently to prevent it.   This might actually be the most effective means to curb copyright infringement.  If artists and producers approach the problem with an attitude of "how can we fix this so both sides will benefit?" rather than the current attitude of shutting down all file sharing systems (and turning fans off to their music, movies, etc), copyright laws will be less of a hassle to enforce. 

Earlier in the year, I summed up by saying that to be effective, copyright laws need to be updated constantly to keep up with technology if there is to be any chance at curbing copyright infringement.  This still holds true - technology is a fluid industry, always improving on itself.  Copyright laws need to follow suit.  However, meshing the two together into infringement-free technology is a proposition that seems mutually beneficial. 

Copyright violations expand much further than just file sharing; they touch almost every aspect of modern life.  There are so many potential violations that trying to individually enforce each and every one is pointless.  The future of copyright must take this in stride, and have a forward looking attitude with regards to its infringement prosecution.   No one can really say where copyright will be in 8 years, but this semester has opened my eyes to the multitude of possibilities in store for the future, both good and bad.  Rather than worrying about how to stop infringers, thus hindering the development of copyright, we should better our technology and copyright laws, and then concern ourselves with potential violations.

A Non-Solution to the Copyright Problem

We started the class in search for an answer to the problems that face and will face the copyright scheme in the next several years.  And the answer is… we don’t know.  The fact of the matter is that the problems are too complex and there are too many interests involved to have one “fix-all” solution (no surprise here).  Thus, here is my take on what might be done and what I would like to see done. 

File Sharing Generally

To reiterate earlier points from the semester, my take on file sharing can be boiled down to one statement – the technology isn’t bad, but the people who are using it, and the people trying to eliminate it for selfish reasons, are.  File sharing programs have several legitimate, beneficial, and worthy uses.  Using file swapping software to engage in the mass illegal uploading/downloading of copyrighted music is not one of these uses.  However, since it is easy to do, and the risk of getting caught is so low, millions of otherwise “law-abiding citizens” have partaken in helping to render some copyrights essentially valueless. 

I assume that most people know that it is not legal to engage in the unauthorized sharing of copyrighted materials – you don’t have to be in law school to figure that out.  If given the opportunity, I think most people would rather pay a reasonable amount to buy their downloads rather than run the slim risk of getting caught and fined till the cows come home by the RIAA.  Whether or not legitimate services like iTunes have cut down on the harm caused by illegal file sharing is yet to be determined.  The fact of the matter is that illegal file sharing has become so prevalent in society, that most people think it is ok to share a few songs and it isn’t a big deal.  Some people probably see copyright law as similar to the laws regulating speed on highways – violations are technically illegal, but everybody is doing it, and they can’t catch everybody, so I’ll speed too.  The RIAA’s solution to file sharing if applied to the speeding context would be to shut down the highways – a non-sensical approach by most people’s standards. 

So how do we control speeding?  By putting more highway patrolmen on the road, making traffic fines more substantial, and educating the public about the negative affects caused by speeding.  A similar approach is needed for illegal file-sharing.  First, a division of the DOJ (anti-cybercrime division?) should allocate some people to seeking out the “mass infringers” of copyrights (or at least to developing better programs to do the job).  Second, legislation needs to be passed that significantly increases the penalties for engaging in “mass infringement” of copyrighted material.  This would make those few who are ruining it for the rest of us, really feel the hurt when the Copyright Cops come for them.  Lastly, people (especially young kids) need to be educated about the fact that copyrights do exist and that the unauthorized sharing of copyrighted material is illegal.  Parents need to take responsibility and inform their children about the risks of illegal file-sharing, as well as monitor what the child is doing on the Internet to make sure they aren’t creating liability for their parents.  As far as the lawsuits go, although they are costly, I think they are a better approach by the RIAA rather than to trying to shut down file sharing outright.  Once again, although lawsuits aren’t the answer, they are better than the alternatives, and they may end up being a strong deterrent if combined with other options. 

As far as Congress is concerned, I think they will not be a factor in changing substantive copyright law too much - we all saw what happened when they tried to introduce the Induce Act.  I think there are too many sides to take money from that the men and women in Congress can’t make up their minds on who to draft the legislation for.  However, I do think that legislation will eventually be passed that changes the penalties for violating copyright law and the methods of enforcement.  As for judicial remedies, now that the Supreme Court has granted cert in Grokster, the verdict on file sharing will soon be in.  I don’t know how it will be done, but I think Grokster is going to end up on the wrong side of a good ole’ fashioned butt-whooping courtesy of the Supremes.  Also, as stated in a previous post:

“I wouldn’t be surprised if the court added an additional requirement to vicarious liability that states that liability will be found if there is no showing of an attempt by the service/technology providers to implement reasonable precautions to prevent the unauthorized copying/distribution of copyrighted material, even if once the service/technology is out on the market there is no ability to supervise how the people use the service/technology.”

I still think this is a good possibility, although it might be mentioned in dicta rather than be a specific holding.  Regardless, somehow I think the court will let the gavel fly and come down on Grokster for intentionally designing software that skirts secondary liability, while allowing users a convenient way to engage in copyright violation.  Designing around the law is not bad in itself, but when the design around allows others to engage in mass infringement of copyrighted material – that is bad. 

The Copyright in General

I don’t see any major changes in the scope of a copyright from how it exists today – except that there will probably be another term extension somewhere along the line.  Which brings me to another point – there should be a fixed duration on copyrights with some kind of renewal system implemented – not another gratuitous extension.  Here’s a novel idea – give some substance back to the clause in the Constitution that talks about giving rights to authors for limited times.  If patents have to be limited in duration, we should put similar limitations on copyrights. 

In an earlier post I proposed a 50 year max limit, with renewals at year 30 and year 40.  A fixed duration allows works to enter the public domain so that other creators out there can build upon them to produce greater works.  I think renewals at years 30 and 40 would ensure that copyrights that have no substantial economic worth (at least more than the renewal fee - $100 or so?) will be added to the public domain earlier.  A 50 year limit is a fair amount of time for a creator to be able to capitalize on their creation.  If you can’t get all the money out of your copyright in 50 years, someone else should be allowed the opportunity to do it for you.  The only people that are really pushing for the extensions are the few big companies who are trying to keep a few prime copyrights protected.  However, since there is nobody stopping them, they can get away with it.  Hopefully the next several years will see an increased dialogue about limiting copyright terms. 

As far as the congestion effect that could occur if copyrights were allowed to enter public domain, I don’t think that is a problem.  If all copyrights enter in the public domain after 50 years, other creators will have several creations to choose from to use in new creations – no one single formerly copyrighted material will be used so much that it will lose its value.  Even if there was overuse, there are so many new consumers being born that in a few years time, a formerly copyrighted material may become popular again. As far as derivative works would be concerned, I think it should be up to the public to decide which version of the story or movie they like the best.  If someone comes out with a new version of Star Wars where Luke doesn’t kill Darth Vader, but instead they team up to eradicate the Ewoks, and the movie successful, then more power to the creator.  For those that don’t like the new ending, the original is still there and available to watch. 

In order to have a renewal system however, there needs to be a registration system.  Several people have commented on a registration system and its benefits, so I won’t make my post any longer by adding the same stuff in.  But I will say that the creation of a registration system can be done at a cheap cost – if it can work for trademarks, then it can work for copyrights. 

Digital Rights Management

The digitalization of content has opened up a giant can of worms for copyright enthusiasts.  Digital copies of songs and movies are increasingly becoming better and better, and it is often hard to determine what is real and what is a copy nowadays.  Although new technologies and methods have been used to prevent content from being “ripped, mixed, and burned”, the hackers seem to find a way to make these new protection measures obsolete in no time at all.  Thus, while it can be useful, it is not the “fix-all” solution to preventing digital copyright theft.  Meanwhile, as the analog hole is being plugged, the public’s fair use right to use copyrighted material is being destroyed.  This is an unfortunate side effect of the war involving digital copyright, but there does not appear to be any voice crying loud enough (or paying enough money) for Congress to hear.  Outcome – RIAA/MPAA will work out side deals with the tech companies to force them to add in the latest and greatest DRM technology in their products, making the consumer purchase more and more products to play the ever-changing new formats that will be developed to combat the relentless hackers.  Result – good for tech companies, bad for consumers. 

Conclusion

P2P has become an international phenomenon that cannot be stopped.  It has helped to significantly change the social norms and traditional conceptions of the development, production, and distribution of music.  For companies like the RIAA/MPAA, this change is not good.  However, as these groups begin to embrace (find ways to capitalize off of) the P2P revolution, both sides will benefit tremendously.  Meanwhile, Congress has been slow to enact legitimate copyright legislation to deal with the problems that P2P poses to copyright owners.  The constant state of flux, and the varied interests that all demand a seat at the bargaining table, have indeed made legislating difficult.  As some have suggested, making music a public good might be a solution, but this would require way too much effort, coordination, and organization on the part of the government, so it is a very unlikely alternative.  As to how it will play out in the end – only time (the RIAA/MPAA, the courts, the tech/service providers, and Congress) will tell.  As a final note, I would like to thank Professor Solum for taking us all on this journey through the muddy waters of copyright - it has been well worth it. 

APPLE ALLEGES COPYRIGHT VIOLATION, SUPPRESSES SALE OF USED IPOD

Here’s another example of copyright law misuse.  A news article published by Wired reported that Apple Computer alleged a copyright violation and was able to get eBay to remove a U2 special edition iPod from it’s listing.  Although the article reported the iPod was “modified,” the only thing modified was the box the unit came in.  The iPod itself was misleadingly described as “modified” but perhaps the more appropriate term describing the iPod should have been “used.” 

The owner did nothing more than load Negativland albums onto the iPod with audiovisual clips from other artists and corporations, labeled the box “Special Edition U2 vs. Negativland” and added pictures of Negativland to the box. The Negativland albums are included in the auction so that the legitimacy of the music would be the same as if an individual bought an iPod and the Negativland albums, brought them home and personally loaded the albums onto the iPod.

Francis Hwang, the seller, states:

"This unauthorized modification is an artful mashup of the forces or corporate megarock and obscure experimental music, and a provocative symbol of the ongoing struggle between those who would confine culture and those who would free it."

and intended to make a statement about U2’s 1991 copyright battle with Negativland over the unauthorized parody of  “I Still Haven’t Found What I’m Looking For.”

It appears that eBay removed the listing because the seller described the item as “unauthorized” and Apple complained their copyrights were violated.  Needless to say, it has surprised intellectual property attorneys because Negativland did not object to having their sound recordings loaded into the iPod and sold by auction with the accompanying CDs and thus, does not appear to be infringing on the sound recordings.

Because the sound recordings do not appear to be an issue, the only other possible copyright issue is the modified packaging.  Although the seller modified box, it can be argued that he didn’t copy any copyrighted element from the packaging but rather created an unauthorized parody by adding additional labels that either supplemented or covered up the copyrighted elements on the original packaging to make a statement about U2’s battle with Negativland.

Perhaps Fred von Lohmann of the Electronic Frontier Foundation summed it up perfectly with the statement:  “We always have to be careful when people invoke intellectual-property rights in order to stop things that have nothing to do with IP.” 

Perhaps eBay was being too cautious by removing the listing simply because the seller described it as “unauthorized” and Apple made a seemingly baseless copyright complaint.  Perhaps Francis Hwang should ditch the controversial box and delete the word “unauthorized” in the item description.  Would certainly be interesting to see what’s the basis of the next copyright complaint if one surfaces at all.

SHAKAPOW!

"If you buy a DVD you have a copy. If you want a backup copy you buy another one." --Jack Valenti

"I say to you that the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone." --Jack Valenti

And I say to you, sir, SHAKAPOW!

No other word embodies how I feel about the current status of copyright law and the painful trek it took to get where it's at today. SHAKAPOW!, to me, is the epitome of an emotional feeling so strong that it erupts forth in an otherwise unintelligible manner. Kind of like after I eat a steak fajita burrito from Chipotle. A feeling so strong, so guttural, and so pure, that no word in the English language can encompass it. SHAKAPOW! is not to be whispered, nor merely spoken in passing - it is only to be bellowed from the depths of your soul. Unfortunately, I use this holy word among holy words to express my frustration with the current copyright situation:

Is the DOJ justified in treating illegal file swappers as terrorists trafficking in counterfeit drugs and cell phone batteries? SHAKAPOW! Can someone injunctify a public library for putting up a public text, which is in its public domain, for public consumption? SHAKAPOW! Are movie downloaders really going to make Manny lose his job because nobody is going to the movie theaters anymore, and yet somehow films like Ocean's Twelve are still generating almost $40 million in box office openings? SHAKAPOW!

Incidentally, did anyone actually go see Ocean's Twelve? Spoiler Alert: Were you as amazed as I was with the French thief's ability to use Capoeria, a Brazilian martial art, to dance his way through the most complex laser security system the world has ever seen, a la Britney Spears' Toxic music video? An excellent use of my $10, by the way. SHAKAPOW!

The Sky is Falling!

Throughout the semester, we have been discussing why copyright law today is in such a mess. We've shot down every proposed solution that would radically alter the copyright regime as either unworkable or impractical (musical socialism, anyone?). Here are some of the major copy problems:

• The P2P Threat. Every PC is a potential printing press, mastering facility, and recording studio, all rolled into one. Duplication of copyrighted works can be done cheaply and with high fidelity. P2P Internet creates a low-cost mass distribution channel for these copies. And unlike the original Napster, the decentralized nature of most P2P clients today means they will continue to operate even if P2P software companies are shut down.
• Copynorms. To the vast majority of P2P users, P2P file sharing of copyrighted works is socially acceptable, even encouraged. This directly conflicts with current copyright laws.
• One-sided Legislative Process. Until recently, most copy legislation has been shaped primarily by the content holders. Consumers do not get a chance to sit at the copyright policy table. Not surprisingly, consumers feel these laws are grossly unfair and serve only to maintain the content holders' monopolies and profits. The results of this lopsided process are copyright laws that make no sense:
  • The DMCA. What happened to our fair use rights?
  • The Sonny Bono Copyright Term Extension Act. What happened to our public domain works?
  • The INDUCE Act. Unlike previous legislation, for the first time, consumers had someone sit at the negotiation table whose interests aligned with theirs. The Consumer Electronic Industry pretty much shut down the proposal, for the time being.
• The International Problem. Being able to enjoin P2P developers in the U.S. will only cause them to move to safe haven countries, or countries where the IP protection is lacking.

As it stands, either norms change or the law must change. Despite all the doom and gloom the RIAA and MPAA are prophesying, I just don't see it. And I may be going out on a limb here, but the current copy system isn't in complete disarray. It works for the most part. Every now and then new technologies will cause a little chaos but either the system itself or the market will eventually fix the problem. Like a piece of buggy software, applying relatively minor, problem-specific patches to fix the major problems may be all we really need. Here are some fixes that probably need to be made:

Mandatory registration

One of the Free Culture problems results from the lack of mandatory registration of copyrights. Our culture builds upon the past; new, creative works sometimes will require authorization clearance from content owners of older works. Transaction costs of obtaining this clearance are increased unnecessarily because IP rights are transferable and without a central registry, content creators have a difficult time finding the current rights holders. Mandatory registration will also help creators determine if a work is already in the public domain (so they can go ahead and use it without needing permission).

A central registry will hopefully be of some assistance to judges, court clerks, and third parties like ISPs in determining whether to issue/comply with those nasty DMCA subpoenas. Finding the current owner of a work can also be problematic due to copy protection lasting well after an author dies, which brings us to the next problem.

Create shorter but renewable copyright terms

Stop all this retroactive term extension nonsense. If Disney wants to keep Mickey in their dungeons for eternity, that's fine, but don't lock up our public domain works in there as well. Most works have little commercial value after their initial run, which seems to be 3-5 years after inception. This could be the basis for setting each term length. The Copyright Office can do a study and set this figure (and change it as the situation requires). Once the term is up, most works should fall into the public domain since the owners would have little incentive to pay a renewal fee if their works have little revenue-generating value. For the few works that remain commercially viable, those can be continually renewed. Mr. Hand suggests the Copyright Office handle the registry and renewal fees- that works for me: Patent Office handles patent registrations, Copyright Office handles copyright registrations.

Get rid of the DMCA, or explicitly give us a fair use right in DRM'ed works

The major premise of the DMCA was that every PC creates an authorized copy in its temporary memory; this is ridiculous. Circumvention of copy protection schemes is prohibited, no matter the reason or purpose. The DMCA has withstood constitutional challenges; at least one court has said that it doesn't violate the fair use doctrine because the analog hole still allows consumers to make copies (albeit poor quality copies). There needs to be explicit exceptions to circumvention of copy protection for fair use purposes. This is going to be very important because it looks like most content will soon be locked up in some copy protection scheme and even the analog hole will be plugged up.

Criminal enforcement of copyright violators

No, I'm not really advocating this (at least not yet), but there's nothing like seeing your college dorm buddy handcuffed and incarcerated for a year for sharing some songs. How's that for dramatic effect. Current copynorms are not going to change unless things like this happen. Of course there's the prison overcrowding problem, and using limited federal resources to enforce copy violations when there are more serious crimes out there doesn't make this a realistic option. If copynorms cannot be changed, that means the copy laws must change.

The RIAA and MPAA have decided that civil infringement suits against P2P individuals, coupled with interdiction software that floods the file sharing networks with fake copies will drive users to the legitimate services. And for a short while it seemed to work. But all indications are that while iTunes had grown steadily, P2P traffic remains steady, if not growing in leaps and bounds.

A more balanced copy legislation process

It may be unnecessary for consumers to have representatives sit at the negotiations table, as long as their interests are adequately represented. For this to happen, there needs to be a more balanced approach to the legislation process. Perhaps the Copyright Office needs to take a more active role in conducting market studies and influencing copy policy. Sure, it's important to have the input of the copyright holders, libraries, consumer electronics industry, and others who sit at the negotiations table, those interests shouldn't be the only interests copyright law should be protecting. Any legislation needs to have in mind the overarching principles embedded in the Progress Clause of our Constitution:

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

Copy protection should be only given to the extent necessary to induce incentives to create. Too much protection and we hinder creativity because our culture builds on pre-existing works. That's why I don't see the P2P threat as a huge problem, given the current situation. Music consumption has more than tripled with the rise of P2P file sharing networks, netting a huge societal benefit. At the same time, profits of the major record labels has only declined slightly from this "rampant piracy." A lot of this was due to their own stubborness to embrace the new technologies, which is completely understandable given how profitable the current distribution methods were and will continue to be for a long, long time. Record sales account for nearly $7B annually, with online sales of music in digital format accounting for under 8% of this currently. CD sales still dominate, and although digital sales will increase over the next couple of years, CD sales will be the larger chunk of record label profits. Like RCA trying to snuff the FM technology so they can squeeze more out of their monopolistic hold on AM, the content holders seek to shut down any new technologies that threaten their currently profitable distribution channels.

Even if the content holders get the ruling they want from Grokster, the results might not be what they were hoping for. Incongruent worldwide IP protection will make it impossible to shut down P2P. KaZaA has already won in the courts of the Netherlands. The Canadian legislature has recognized a right to make copies for private use, and the Canadian Supreme Court has held that downloading copyrighted works via P2P for personal use is not a violation of copyright laws. Many other countries have little or no IP protection. Developing countries see IP rights as hindering their country's progress.

Thus, shutting down P2P in the U.S., if that's even possible, will only shift operations extraterritorially. But even that's not necessary to keep P2P alive. Shutting down Napster created a slew of decentralized P2P software that will continue to operate even if the developers were to be enjoined. A lot of the P2P software code is also freely available for others to develop their own clients.

The content owners claim that if P2P is not shut down, artists will no longer have an incentive to create, and less new works will be released. But this simply is not true. Minus the few successful artists, the vast majority make very little from their association with the record labels. Artists will continue to create, because the big pay day is not what drives them to create (although it certainly may be a factor).

If, however, the content holders are right and people stop paying for content enmasse because of P2P, then we should consider more drastic measures. But with the current situation, it looks like market forces will fix itself. P2P creates new markets and opportunities for the content owners, but they must be willing to adapt. There were many technologies, novel for their time, that created threats to copyright law and it turned out benefit the content holders more than it hurt them (i.e., the VCR).

Civil enforcement of copy violations and any educational campaigns to change copynorms seems futile. Part of the problem harkens back to having a more balanced legislative approach, but that means nothing if the copy laws and policies that ultimately pass seem unfair or makes no sense to consumers. As Lord Templeman in CBS Songs Ltd. v. Amstrad Consumer Electronics (a Canadian copyright case) put it:

From the point of view of society the present position is lamentable. Millions of breaches of the law must be committed by home copiers every year. Some home copiers may break the law in ignorance, despite the extensive publicity and warning notices on records, tapes and films. Some home copiers may break the law because they estimate that their chances of detection as non-existent. Some home copiers may consider that the entertainment and recording industry already exhibit all the characteristics of an undesirable monopoly, lavish expenses, extravagant earnings and exorbitant profits and that the blank tape is the only restraint on further increases in the price of records. Whatever the reason for home copying, the beat of Sergeant Pepper and the soaring sounds of Miserere from unlawful copies are more powerful than law abiding instincts or twinges of consicence. A law which is treated with such contempt should be amended or repealed.

Where's the Cheese?

These past four months, I have felt like a rat in a maze searching for cheese that doesn’t exist.  I have come to the conclusion that neither copyright law nor new technologies will ever be able to provide an acceptable solution to digital copyright problems.  People will always figure out how to use software they have written to ignore, circumvent, or just plane laugh at the law. Future technologies which are more limiting than current technologies will not be accepted. Even if they are, they will be circumvented by hackers.

Why copyright laws won't work
I don’t think copyright laws will significantly change the present course of media.  If the vast majority of people don't think copyright infringement is morally wrong and some form of P2P filesharing remains available, P2P will always exist.  American laws are useless because the internet is global.  There will always be countries willing (and even eager) to ignore American laws.  People will find a way to obtain the technology from other countries who don't follow our laws and P2P programs that could never be released in the

US

will be released to the world from other countries.

Technology that won’t work
Media protection will be, almost solely, technology based.  I recently posted on a copy protected CD (Norah Jones) that was giving me problems.  I think I have above average computer skills, but I had no idea how to copy a protected CD onto my hard drive or transfer it to my MP3 player.  I think there are very few people who could copy this CD.  I searched Google for a good hour looking for tips and I was still in the dark.  I also spent a lot of time on my friend’s computer searching Kazaa for the songs.  I only found 2 songs that were actually good copies. This leads me to assume that copy protection actually works pretty well.  A false assumption on my part.  I'm sure if I spent a little more time and tried a few other P2P programs, I could find all the high quality Norah Jones songs I want. 

Unfortunately, there are only so many ways you can change a CD to add copy protection while still allowing it to play on an unchanged player.  So, the electronics will have to change as well.  Laws could be passed requiring electronics manufacturers to make devices with very limited playing capabilities. This change would have to be global.  I guess the

US

could place trade embargos on any country who does not adhere to US standards.  But this would require a whole new media to be developed that only plays on these special players, and, only new songs would be protected.  Further, I find it hard to believe that the public would support this in any way.  In the months and days before the enforcement date of the new law, iPod sales would be enormous as consumers stock up on a lifetime supply of barrier free players and the majority of people would not buy any songs released in this new shackled format.  Finally, even if these new products were released and purchased, hackers will always be able to find a way to use software to circumvent the protections embedded in the hardware. 

Is there a technology based solution?
Yes.  But it is a solution that all of us fear.  Copyright infringement can be vastly controlled with a fundamental restructuring of the internet.  ISP's can close individual ports and keep people from accessing files on other computers.  Without access to the files of others, one would be very limited in the way that they could infringe on copyrights of digital media.  If I wanted to give some music to a friend, I would have to do it the old fashioned way: I would have to physically give him a hard copy.  Of course, people would not share with anyone other than people they personally know, so the amount of infringement (and the usefulness of the internet) would be greatly reduced.  People could still view content on web pages but nothing could be downloaded unless it came from a government certified host. 

While this solution might be terrifying to the majority of the public, I'm sure much of the government would love it.  I imagine that the government hates the internet as it is now structured.  Had they known what the internet would become, they would never have allowed for its public release.  The Secret Service, FBI, CIA, and a host of other government entities are horrified by the fact that even a 10 year old kid can send or receive a file from anywhere and to anywhere without any governmental knowledge whatsoever.  They would love to be able to control the ISP's and most of the internet traffic.  Let's all take a few seconds in silent prayer.  "Please don't ever let that happen." 

Is a bright future possible?
I sure hope so.  I'm hoping for a future that embraces the Creative Commons.  We need to find a variety of ways to make Creative Commons music profitable.  I think Wired Magazine is onto something.  They recently released a Creative Commons Licensed CD included with one of their issues.  I assume they paid each artist a set amount that was funded by Wired's advertising department.  Other companies could do the same.

This class has left me with more fear than hope.  I guess we will all just have to wait and see what happens. 

Nowhere Fast?

So how far have we come?  Our once optimistic ideas about figuring out the possible future of copyright seem long gone.  But there are a number of possible futures for copyright that all are as possible as the next.  However, the most concerning aspect is that things don't seem to be moving anywhere right now.  P2P, for the most part, is alive and well with the exception of some new RIAA lawsuits every so often.  But these lawsuits focus on a tiny, and I mean tiny, fraction of P2P users out there.  So what is the next step?  Which battles do we fight?  And what do we value the most?  And it seems like we are being pulled in so many different directions all at once.  Who are we most concerned with protecting: authors, musicians, consumers, electronics manufacturers, music and movie companies?  They all deserve equal protection.  However, the hardest question of all is how to properly protect these different interests.  And right now, no one is happy.  Music and movie companies find their content being traded by the consumer over the internet who only wants to listen to one or two songs on a CD that costs eighteen dollars.  But whatever the solution, it must be very forward looking.  Technology is changing faster than you can say copyright.  And the latest DRM technology is being hacked almost as quickly as it is developed.  What is it going to take?  And what are our options?  There are some advocates of the copyright registration system.  Some believe that the best way to fight technology is with technology.  Some would like to let the Department of Justice handle the problem.  All of these systems have strengths and weaknesses.  But I think focusing on just one is somehow missing out on the point: the bigger picture. 

In order to see any real change in copyright in the United States, we will have to experience a near catastrophic event.  And the Supreme Court’s decision to hear the Grokster case could be that event.  Now, by catastrophic I do not mean a meteor hitting the Earth or nuclear war.  A catastrophic event in the Copyright world would simply be something that changes the way the average person is affected by the copyright law.  Although, I guess the Supreme Court is in a position where it can drop a bomb on the P2P industry.  Here is the real problem.  No single solution is going to have a major impact on Copyright.  This decision may have a drastic impact on p2p as we know it today, but shutting down the major p2p companies will not be enough.  Major changes in copyright law, not just the body of law itself but also the way it is enforced, require reforms in 1. copynorms, 2. the law itself, and 3. enforcement (civil or criminal).   

Copynorms

This discussion must begin and end here.  Many people have come to believe that trading music on the internet is fine (either they believe no one is harmed by it or they think that it is fine because they are confident that they will not get caught).  And in some ways no one is harmed by it.  (I will skip the discussion on rivalrousness and excludability).  But some people are.  And it is easy for the consumer to come with the argument that musicians and actors and record executives make enough money as it is and there is nothing wrong with setting their paychecks back a little bit.  But when was the last time that someone took income away from you and you were ok with it because the person who took it from you makes less money than you?  I can’t remember the last time I was ok with that either. 

But of course, other considerations must be weighed in.  When discussing copynorms, we are also discussing the use of art and music and literature.  And would society as a whole benefit more or less if we use strict copyright laws to keep a leash on the amount of information that is distributed throughout society.  Groups like Creative Commons and Free Culture have dedicated themselves to allow “creativity and innovation to thrive.”  These organizations provide an important way for the average person to learn about copyright issues and see how these issues actually affect them.  I stress the importance of these groups because if there is to be change in current copynorms, people must know what the issues are and why they are the way they are.  If people are fighting for lessened copyright law not because they want to see creativity and innovation thrive, but solely because they want to be able to download free mp3s and movies then they are fighting to change laws that, in actuality, are doing exactly what they are designed to do. 

The Law

P2P is the most publicized copyright problem today.  And this problem needs to be resolved as soon as possible.  Hopefully, the Supreme Court will take care of that one.  But P2P aside, there are still other issues that need reforming.   I do not think that the law should be providing extended protection to works that are going unused.  I think that renewable, limited terms are the way to go, as well as a national copyright registry. 

One possible solution would be to allow dormant works (ones that have not been used commercially for a certain amount of time) to go into the public domain but can then be taken back out of the public domain.  For example, if a work has gone dormant for 10 years and the copyright is still held by the original owner, the work would go into the public domain for a limited amount of time.  I say limited because other interested parties would be allowed to fight over the rights to commercially exploit the work.  This would work almost like a contest.  The first two years after a work has gone into the public domain, anyone who wants to could use the work as they please for commercial or non-commercial purposes.  At the end of that two years, the Copyright office could take applications from those who want to secure the rights to the work and exclusive rights to the work could be given to the applicant who has used the work most efficiently.  This would probably have to be based on revenue earned from the use of the work over the last two years.  But this would mean that that person has used the work the most efficiently and promoted the work to the public most effectively.  They could be granted a very limited copyright term. (ie. Five years).  At the end of that time, they could renew their term if they have met certain standards put in place by the copyright office.  Again, these standards would probably have to be based on revenue. 

This system would certainly require a national copyright registry and would be very complicated, but if done correctly, it would leave most works in the public domain (because lets face it, there would not be a market for most works beyond their initial run) and if someone really wanted to gain the copyright to a certain work, they would have to earn the right to use it and continue to use it efficiently.  This system would give people incentives to either put these works to good use or let them go into the public domain.  Of course, even if a limited copyright term were granted to someone, the fair use doctrine must remain intact. 

Enforcement

In a perfect world, law enforcement could properly enforce copyright violations.  But this is not a perfect world.  And as of now, it looks like civil remedies are the best we do.  Criminal sanction would actually be the most effective means of getting the average file sharer to stop sharing copyrighted works.  But it is just not realistic.  One, law enforcement agencies just don’t have the resources.  And two, if these cases ever did go to trial, what jury would actually convict a fifteen year old child for sharing music on his computer?  (again, copynorms are to blame).  So for now, the RIAA and MPAA just need to keep filing their civil suits and hope that as more people settle, more people will realize that the risks outweigh the benefits.  Unless it becomes easier for the MPAA and RIAA to obtain the names of infringers from ISPs, things could probably go on like this forever.  And unfortunately, law enforcement probably will never have the resources to go after a significant number of infringers criminally. 

Copynorms Revisited

Again, in order to significantly change copynorms, something huge must happen.  If Grokster is overturned and many of the major P2P networks are shutdown, maybe this would be a start.  It would send a message to all P2P users that this is a big enough problem that the Supreme Court decided to take matters into its own hands.  P2P will still exist, but for quite some time, on much smaller levels.  This could be a perfect opportunity for the RIAA and the MPAA to bring suit against a much greater percentage of the infringers out there (because there will be so many less of them) and make a real difference.  And if the law is going to change significantly, the consumer must get involved. 

One Final Note

As I posted earlier, I really think that there is something significant to online music labels.  One of major concerns with loosened copyright laws is that the amount of content will decrease.  However, if online music labels are the future of the recording industry, there is no way that content will decrease.  The exact opposite will happen.  For example, right now major record labels must make a serious investment when they sign any new artist.  They must pay for the recording of the music, the manufacture of CDs, promotion, shipping, etc.  But selling music exclusively online gets rid of many of these costs.  Therefore, it is less of a risk for record labels to sign new acts.  And furthermore, almost anyone can start their own record label with the right recording equipment and a website.  So many artists will be able to distribute their music that way.  They will not be at the mercy of major record labels only signing acts that they believe to be commercially friendly.  And when talking about music, there is no such thing as too much.  It will obviously be difficult for some of these bands to survive strictly off of their online sales, especially if mass file sharing is alive and well in its current form.  But that is a moot point, because most musicians out there would be making music whether they were getting rich off it or not.  I play music every day.  I haven’t seen a penny.  But I continue to do it.  Why?  Because I love it. 

Conclusion

I don’t think that Copyright is doomed.  And I don’t think that someone necessarily has to lose in order for copyright law to be effective.  But I think the biggest obstacle to the current copyright system is our current copynorms.  And I’ll say it again.  In order for our copynorms to change significantly, we will have to experience a near catastrophic event.  It will be interesting to see how the Grokster decision comes out.  If P2P is left alone by the Supreme Court, then it is back to the legislative process.  And maybe with that, the average consumer will be forced to reevaluate the way that copyright law affects him or her or actually take notice of the fact hat is does affect them.  And hopefully this will help persuade consumer groups to try to take part in the legislative process that as of right no is dominated by massive corporations who do not represent the interests of the average American.  Things are not as bad as they seem.  But whatever the case, Copyright law must be strict enough to protect the content providers, loose enough to promote creativity and innovation, and flexible enough to change with growing technology.  The future is uncertain, but it is by no means hopeless.  And even though it might seem like we are heading nowhere fast…it may just be for right now.

How the War will End

A war about copyright rages all around – and we’re all focusing on the wrong thing.  No doubt, current technologies threaten existing businesses.  No doubt they may threaten artists.  But technologies change.  The industry and technologists have plenty of ways to use technology to protect themselves against the current threats of the Internet.  This is a fire that if let alone would burn itself out.” Lessig, Lawrence “Free Culture”, pg 211.

The Copyfuture class has been analyzing solutions, theories and legislation all semester long, and has been unable to find a suitable engine to put the fire out.  The internet, like gasoline on dry bush in the middle of a Santa Ana dry, hot, windy spell, is creating a problem never seen before in the past.  However, we all know in San Diego how unstoppable and unpredictable these firestorms can be.  Wherefore, devising a perfect plan to stop the storm before it causes irreparable harm is next to impossible, just as impossible as it will be for Congress to make legislation that will satisfy all interested parties of the “Copyfight”.

I agree with Lessig, that if you leave a fire alone, eventually it will burn itself out.  However, one must consider, or balance, the amount of damage caused by letting it burn itself out, to the overall benefit gained by leaving it alone.  As it stands now, unless the Supreme Court grants Certiorari in the Grokster case and reverses the decision, there may be a high probability the issue may be left alone.

Leaving all Alone

If we left the Copyright system alone as it stands today, the market, or at least an ideal efficient market, will be given the chance to find a way to compromise.  These natural changes (evolution) may create rewards and problems in a pattern of ebbs and flows to the interested parties of the Copyfight.  Eventually the market would find a balance, like a Teeter-totter, with the Consumer Electronic Industry (CEI) on one end, the Content Industry on the other, and the Consumer in the middle.

Perhaps society has created this fire to burn off the excess foliage that exists in the Content Industry today (Hollywood).  Although Hollywood is spending billions of dollars to produce new content, it is debatable whether or not the content is increasing in quality.  Where the price of purchasing increases, the quality necessarily doesn’t.  In fact, it is usually the lower budgeted films that bring uniqueness and creativity to the world of content.  Even the highly paid stars realize this because they will commit much time and money to these projects just for the chance to work on a quality film.

Imagine we were to leave it all alone.   The CEI will continue to create and manufacture new audio and video equipment that is designed to succeed with peer-to-peer sharing of (free) digital content.  The Content Industry will continue to lose money, and furthermore lose incentives to create new music.  The Consumer will be able to enjoy good content for free on their cool new gadgets.   For a while, the CEI and the Consumers will enjoy the benefits, and the Content Industry will bare the costs of the system.

However, the content will eventually start to decline due to the lack of protection and incentives.  This in turn will create problems for the Consumer because of the lack of quantity and quality of content. Less content means the less the demand by the Consumer for new gadgets to hear the content on.  This may cause the market to shift to a system where the CEI works with the Content Industry to create new protection through technology.   This type of system allows the Content Industry to enjoy more of the profits, but forces the CEI and Consumer to bare more of the costs. 

Leave legislation, lobbyists and the Court out of it, and eventually supply and demand will even it all out.  It is human nature for people to want to take a “good” for free instead of paying the appropriate cost for it.  However, if the good disappears because no one is paying for it, society’s “norms” will change, and when the good begins to return the general population will realize the value of the good, and no longer abuse it by stealing it.  Perhaps a system will evolve where the content industries merge with the Consumer Electronic Industry and Internet Providers, as a sort of vertical integration.  Allowing both interested sides to work together to find this balance.

Gasoline Added

Perhaps the fire was started due to a spark from the compression free culture is experiencing.   Lessig points out in his book “Free Culture” how fair use rights have almost disappeared.  Either one risks being sued or spends the time, and money, to get the rights to content that should obviously be available under the fair use rights.  This in turn restricts the way culture and content is made.  The source of gasoline Lessig worries about being added to the fire is legislation that further restricts the way free culture is made currently in society.  He thinks it will be an irreparable harm committed to further extend Copyrights. 

Back-fires started

Let’s alter the mix of rights so that people are free to build upon our culture.  Free to add or mix as they see fit.  We could make this change without necessarily requiring that the “free” use be free as in “free beer.”  Instead, the system could simply make it easy for follow-on creators to compensate artists without requiring an army of lawyers to come along[.]

Lessig, Lawrence. “Free Culture”, pg 106.

Lessig provides a solution to this disaster, Creative Commons.  Creative Commons is the backfire that Lessig developed which could stop the fire from spreading too far, and perhaps force it to burn out faster while still eliminating the excess foliage.  The system allows a creator to chose the type of licenses that best fits his needs by offering certain rights to any taker, but still allowing for restriction of use.  This system creates the balance necessary between incentives to create and fair use, which the current system doesn’t offer. 

The best part about this proposal is that no new changes in legislation need to occur.  This is not a mandatory way to license content, but instead it is an additional way where new advantages can be enjoyed.  Additionally, this system will work as an experiment to determine if the 120 years of Copyright protection is really the fortification the Content Industry needs.

However, the Patent system is already a strong verification that this length of time is unnecessary to create incentives to invent. The idea of the patent system is to grant the inventor a short period of time where they own exclusive rights to the invention, under the provision that they disclose the invention for others to learn from it.  Subsequently, if another inventor has designed a product that uses this technology, but incorporates and additional novel and non-obvious component to it, they too can obtain exclusive rights to the new technology.  The system is created specifically so others can expand on what already exists.  Meanwhile, there continues to be plenty of incentives for technology companies to continue to design new products and patent new ideas.

So for the Future of Copyrights, I would like to see a stronger push by Consumers and the Consumer Electronic Industry for the Creative Commons system.  Like all good ideas, money is needed to start off a project like this.  With the backing of major Electronic device companies and consumers (and of course a few major artists), this could be vastly more successful than the old system in promoting incentives for people to create new content.  Additionally, society will be left with a much less restricted “Free Culture”, where everyone will benefit by experiencing new, unique, and high quality content.

RIAA Still Trying

The Recording Industry of Amercia has not given up hope that lawsuits will deter people from illegally downloading music on P2P networks.  The RIAA has announced 754 lawsuits against both named and unnamed defendants.  The RIAA is making their usual claim that the defendants are infringing on the rights of their members.  This year we have already seen the proliferation of lawsuits with cases in Europe and the MPAA launching some lawsuits of its own.  The question is what impact are the lawsuits having on the illegal downloading of music?  Is the continuation of lawsuits by the RIAA a sign of futility or do they actually believe the lawsuits are an effective deterrent?

As of today the RIAA has sued 7706 people, the majority of whom are users of P2P networks who make huge libraries of music available for download.  One way of analyzing the effect of lawsuits is to measure the growth or decline of illegal P2P use.  This is difficult to determine since there are no real individual statistics for illegal use.  The only real way to measure P2P use is in the general growth of its use.  According to Reuters there were 7.5 million users of P2P networks in November of this year.  It was only 4.4 million users in November of 2003.  That is a 70.5 percent growth in just one year despite the lawsuits and threats of the RIAA.  Whether or not the RIAA lawsuits are deterring illegal use is uncertain, but it is clear that it is not having any effect on the overall popularity of P2P networks.  The RIAA must have some confidence that the lawsuits are deterring illegal downloads of music, or they probably would have changed their method of attack.  They could stop suing just the owners of large music libraries and start suing users who make small libraries available or even individual downloaders.  This would probably result in tens of thousands of lawsuits.  It is apparent that at this point the RIAA still fears that such a move would result in a backlash rather than be an effective deterrent.  However, if the proliferation of P2P networks continues it is likely the illegal downloading will as well.  This could eventually force the RIAA to get more aggressive in their lawsuits, or risk the continuing decline of CD sales.

Don't Cry For Me, Copyright

Not surprisingly, the mix of 25 or so law students that spent the past semester contemplating the present and future state of copyright was unable to reach any sort of consensus or develop any coherent vision for the future. Furthermore, there appeared to be little deviation of opinions amongst individuals as the class progressed, myself included. Given this backdrop, how realistic is it to think that away from the cozy, intellectually liberating, confines of academia, businessmen with vested interests, politicians requiring war chests full of ducats in order to be re-elected, and a wide variety of divergent opinions on the part of artists and individuals, can ever converge to yield a future vision that satisfies all?

The Status Quo
What would happen if things continued as they now stand? What would be the result if nothing was to change with respect to legislation or business models encompassing digital file trading possibilities? Would the entertainment industry be decimated? The past year apparently was a pretty decent one for the recording industry, though they’ve definitely taken some hits in recent years, for a variety of reasons, including P2P sharing and other factors. Currently, the RIAA, MPAA and a large number of foreign counterparts, are targeting file traders (mostly uploaders), supernodes, bit torrent servers, and P2P networks themselves. Under the current regime, there isn’t going to be any one death blow struck against free file trading, though the content industry can and will use a variety of means to make it more difficult to use these networks to trade copyrighted files. Some P2P networks will be shut down, new ones will start up, this fact, bi-monthly rounds of lawsuits will be launched against users, all of which will tend to keep less savvy, less motivated users away from illicit file trading. The average user, who only a few years ago was shouting in caps on their parents’ AOL account, is going to be increasingly drawn towards commercial, LEGAL models, such as iTunes, Rhapsody, Napster Jr., and future ones, such as Snocap: less hassle, less risk, less thinking.

Barring structural changes, there would certainly need to changes in the business models of content providers, particularly the music industry, but should this not be happening anyway? Technology has always affected companies. Polaroid and Kodak for example, are probably less than thrilled with the advent of digital photography. Blockbuster Video is struggling to stay afloat amidst competition from Netflix and other companies with new business models, and is now making concessions with regards to late fees in an attempt to slow the hemorrhaging. With the advent of far cheaper distribution and media, the industry might increase the use of legal online distribution models if there are appropriate adjustments to their economics.

The Law
As predicted by the class, the Supremes gave cert to Grokster. This should ultimately put some much-needed teeth and consistency into secondary liability law. Companies should not be able to hide from the law by pretending they don’t know what their products are being used for. The holding and dicta of the Court’s decision will undoubtedly be analyzed to death. Will it discuss fair use? Will it add to the contours of the law set out years ago in Sony? An enlightened Court could mollify all sides with a well-crafted decision. I won’t be holding my breath though…

Future legislation is inevitable as well. Though the almost childishly drafted Induce Act didn’t make it through Congress last term, it may well rise again in some incarnation. If it doesn't, something comparable will. Industry lobby groups are not going away, so sooner or later, an excessively broad law is probably going to pass. If it is even close to being as badly written as the Induce Act though, it will probably ultimately fail to have the desired results in terms of quenching file trading. Like broad, panic-driven rules put into place in the very early days of the recombinant DNA revolution, as the fear of new strains of E.coli reigned, drastically unreasonable rules are rarely followed and generally die off one way or another, either through constitutional challenges or newer, improved legislation. 

Content and Terms
Culture is currently disappearing at a rapid rate. Simply put, works that now have little chance of being financially beneficial to copyright owners are being buried… owned but no longer disseminated. The solution to this is one of the most straightforward aspects to the whole copyright dilemma: formalities must be restored to copyright. There is no justification for the current effortless, default renewal of copyrights. If a copyright owner can’t be bothered to fill out a bit of paperwork and pay a nominal fee, then it reflects the fact that the copyright poses no value to them. The utilitarian view is to put any such copyright into the public domain, where it at least has some possibility of finding new use. From a practical standpoint, the re-establishment of formalities could be used as a tradeoff in any future concessions to the industry. Such a move would show faith to the Constitution’s IP clause. The foundation of US patent and copyright protection emanates from a strong utilitarian background,  a system that provides incentives that lead to the development of new works or products. One of the key problems with this idea however, is that relaxed formalities emerged out of the international copyright standards of the Berne Convention, thus adding players to the negotiating mix.

Random Futurama
Artists are not going to stop making music. Today's successful screenwriters and directors are not going to be flooding restaurants in search of good waitering gigs. Record stores will still be around in 10 years, but you won’t walk into a store with racks full of CDs. If CDs are still around, you’ll probably be able to listen to selections off of some master hard drive, and then burn a CD in-store for purchase. Less floor space, less inventory = lower operating costs. No more Virgin Megastores.

Every consumer’s best friend Microsoft, is going to move into the content industry when they find some juicy, under-valued record company that they think can enhance their big picture. Nobody is sitting on more cash than MS and they are running out of things to do with it. The “dismal” financial scene in the recording industry won’t scare off MS. They’ll find it financially worthwhile because they will already positioned themselves through their typical maneuvers. For example, MS’ DRM, and audio and video formats that had previously fought to have accepted as “standards” by industry bodies (HD-DVD, Blu-Ray, mpeg group etc…), will be subverted by MS, taken in a new direction as soon as they are widely accepted, ensuring that their use all but requires the use of additional MS products. I shudder to say it, but maybe they will be able to bring together a better future for the industry and the consumer.

Technology will ultimately be the strongest factor in coming years.  If efforts are made to offer the best quality recordings at a decent price using the best formats, value will trump illegal trading.  Highspeed broadband is now the norm. In 10 years, today's DSL and cable speeds will seem like 14.4 modem access by comparison.  If the industry is wise, this should equate to a massive opportunity, not a threat!

Where have we gone: Where do we go?

The Problem:  Let's face it, the threat of rampant and unprecedented theft of digital media continues to grow.  And as technology continues to grow, that threat and theft will grow simultaneously.  The music industry has already faced, and continues to face, this threat, but has largely failed in defending musicians' intellectual property.  With the advent and increasing popularity of high-speed Internet connections, Hollywood faces the same dilemma and is fighting back. As Time magazine writer Amanda Ripley recently noted, "Studio executives, no strangers to melodrama, have begun to talk about movie piracy the way FBI agents talk about terrorism: they watch the Web for "chatter," they embed films with hidden 'fingerprints,' and they speak without irony about 'changing hearts and minds.' They even use night-vision goggles. It's not going too far to say they are completely paranoid, which doesn't mean they are wrong."  As the battle rages, is guerrilla warfare the best method to fight a "menace" that may represent the entertainment industry's greatest opportunity?

The Entertainment Industry's Modern Approach    In the summer of 2003, the music industry commenced a widespread, yet selective offensive against individual dowloaders. The RIAA has since sued over 1900 users, with more than 400 users paying fines averaging $3000. In March 2004, the RIAA brought an additional 532 lawsuits against anonymous users, including eighty-nine individuals from universities.  Additionnally, there has been an effort to educate potential infringers that downloading is an illegal activity.  Unfortunately, ignorance is probably not the problem the entertainment industry is facing.

Alongside this aggressive strategy, there are also the well publicized lobbying efforts. Through these efforts, there has been a push for heavily increased penalties, including criminal sanctions, against illegal dowloaders.  As Professor Samuelson noted in her presentation, the entertainment industry's goal is to enlist the Department of Justice as the "Hollywood Police."  As we all know, many of these efforts have been stymied, or delayed, by groups such as the EFF( amongst others).

Perhaps the best effort thus far has been to join the fray.  Online music stores like iTunes not only give consumers the option to download only the songs they desire without having to buy an entire album, they allow artists to release individual tracks without releasing a complete album. At the conclusion of 2004's first quarter, Apple reported that iTunes sold 50 million songs, with 2.5 million more songs downloaded every week. Following iTunes' success, new competitors, including Roxio's Napster and MusicMatch, have entered into the mix.

Copyright in the Digital Age:  The purpose behind the Copyright Clause has been debated since the time of the Constitution. Four main theories have been proposed: "that copyright is to protect the author's rights; that copyright is to promote learning; that copyright is to provide order in the book trade as a government grant; and that copyright is to prevent harmful monopoly."  I think it is safe to assume that the concept of Intellectual Property, to Professor Lemley's disdain, has turned protecting the author's rights into a full fledged property law regime for individuals and corporations alike.  Moreover, protecting the author's right has expanded dramatically over the years with the amendments of 1976 and the enactment of the infamous DMCA of 1998.

We have looked at various alternatives in an attempt to protect copyright law in the digital arena.  Musical Socialism came and went quickly.  Really, though, did it ever have a chance in the capitalist world($$)?   Broad taxation schemes, in my opinion, seemed like a viable option for time.  Taxation and blanket licensing both discourage the development of copying technology.  This social cost is probably greater for blanket licensing because licensing usually leaves less surplus to consumers. Consumer surplus from using the copying technology is an incentive to create it.  Taxation and blanket licensing have a similar effect on the market for the shared work--sharing is permitted and the tax revenue received by the copyright owner rises as the number of people sharing rises. Compared to licensing, profit is generally lower under a tax scheme, even if the tax revenue is paid to the copyright owner.  However, profit tends to be lower because sellers lose control over sharing; a single linear tax rate is chosen by the government. And thus, another strategy probably fails in light of varying private interest in the collection and division of shrinking profits. 

Anti circumvention technologies, which help to control and define viewer use, seemed like another potential, and likely, option to aid in the protection of copyright. These types of technological protection systems, including Digital Rights Management (DRM) tools and encryption, were the recommendation of the former head of the MPAA, Jack Valenti.  While this approach has some backing, I remain skeptical.  Although its a simple rebuttal, DRM will fail because history has dictated that once something is encrypted, it is just as quickly decrypted. And aside from that simple, but effective rebuttal, getting the manufacturers of playback devices to universally drink the DRM coolaid could prove to be a daunting task.  Furthermore, while DRM would create an interesting underground market for playback devices, the strategy would be hindered by current owners not wanting to go out and re-purchase another CD/DVD player with no added technologically beneficial features for themselves.

I think Professor Solum was dead on when commenting that the Horse was never really in the barn. Cyberspace is what it was created to be, a separate space and time that cannot be shut down.  Regardless of any Copyright Reform, P2P networks will continue to exist and most likely thrive.  Unless ISP's join content providers and decide to completely re-invent the architecture of the Internet, which is far beyond even highly unlikely in my humble opinion, the entertainment industry will have to deal with illegal file sharing in whatever way it sees fit.  If that means hiring hundreds of thousands of attorneys to pursue the exponentially growing numbers of P2P end-users, so be it.  At least we'll all have jobs!

DRM: The Next Nitrate?

"To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." U.S. CONST., art. 1, § 8.

The Founders granted Congress the power to create a system to promote the continued development and innovation of American authors. It is important to remember the purpose of this power. Unfortunately, just as the Commerce Clause has mutated under the direction of Congress, so too has the Copyright power. Unfortunately this morphing, fueled by special interests, hurts the consumers.

The damage goes deeper than our wallets. It deprives future generations of seminal works, historical pieces and inspiration from past works. The long-term damage will come not from P2P, but from the legislative butchering of the Copyright system.

Our Past: Unpreserved In Nitrate

Motion pictures created before the 1950s used nitrate-based film. For those who have never seen nitrate, it's amazing. Even pictures that are over fifty years old have a magical effect; the picture jumps off the screen (I am lucky to have seen many of the original silent films thanks to a film class at UCLA and the work of the UCLA Film and Television Archive.) But nitrate's downsides or more plentiful than its benefits. Nitrate film is highly flammable and is susceptible to the elements. The nitrate in the film reacts with air, forms nitric acid, and turns the film into a pile of brown dust. As a result, nearly 90% of the world's first motion pictures are lost forever. (Silent Era lists a number of the films believed to be lost.) On top of the missing films, there are countless newsreels containing the first moving images of our nation's past, either lost or slowly disintegrating.

What does this have to do with copyright?

Under early copyright law, films could not even receive a copyright (until concessions made between 1910-1912). Prior to the changes, the ingenious Mr. Edison and his production company found a loophole: they registered their films as photographs (which could be receive copyright protection) instead. Each movie was transferred to printed paper and registered as a series of photographs. At the time, copyright law also required registration: a copy of the work had to be sent along with the application. (See Film Preservation - Saving America's Movies.) The Library of Congress currently retains some 3,000 printed copies of films made and copyrighted from 1894-1915.

Many of the originals are lost because early filmmakers saw their movies as products. There was little interest in re-releasing a movie after it lost its original glamor. The originals were either stored improperly, lost, or destroyed to make room for newer, better motion pictures. Format changes, the introduction of the sound, color and other technological advances left most people looking to the future instead of preserving the past. In addition it would have been impossible for an individual to archive his favorite films: an average citizen had no means to copy (or even view) a film on his own.

Fast forward to present day. The Betamax has been replaced by the VCR, the VCR by the DVD. And the Internet offers the ability to trade and transfer digital media faster than you can say "recipe!"

While some of us are busy searching for the latest songs on the iTunes Music Store, others are feverishly looking for a bootleg pre-release copy of Flying Daggers. And elsewhere, money is being spent attempting to restore our classics. American Movie Classics (AMC) spends somewhere between $30 thousand to $300 thousand restoring and old film. The Library of Congress attempts to do the same, though with a budget that has been slashed over the past 20 years. Independent investors, historians and movie buffs are throwing in their share, too.

The Sony Bono Copyright Extension Act, however, introduced a serious wrinkle. Suddenly, a number of films set to go into the public domain hit a snag. Silent Era specifically warns would-be restorationists about these changes. "Any film under an active copyright is protected from unauthorized copying and selling (in duplicate film print, home video, or digitized forms, in whole or part), and from unauthorized public exhibition."

As a result, there is even less incentive the invest in the restoration of a film of unknown origin or copyright status. Do so is a bad business decision. Not only might one be subject to criminal or civil penalties, any possibility of public exhibition (or income derived therefrom to pay for the restoration) could be lost. So the waiting game continues while film continues to rot away. The Library of Congress points out that even when it restores a film from the only remaining copy--in its vaults--the copyright owner controls access to the restored films and must get his own copy. So taxpayer money may be used to restore a film that was not properly preserved by its owner, and that very same owner reaps the benefits of our investment. From the Motion Picture Conservation at the Library of Congress (emphasis added):

[T]he federal government . . . has realized that it cannot singlehandedly pay for the preservation  of all aspects of the national heritage, which by definition grows with the passing of time. The search for partners in this preservation  enterprise has been directed toward businesses, charities and wealthy private individuals. These groups, however, are now besieged by requests for funds, and more and more require an identifiable commercial benefit or need to see a tangible result from their generosity,  such as media attention, before allocating resources.

In case the result is not obvious: there is little incentive to try and preserve our past. The retroactive copyright term extensions remove the little incentive that once existed.

Not everything rots as a result of chemical processes, however. The extensions keep a number of works purposely "lost" from public access. Disney, for example, refuses a recent re-release Song of the South (This 1946 classic, including the Oscar Winning "Zip-a-Dee-Doo-Dah" melody we grew up with, was last sold on video in 1986). John Wayne's estate won't allow The High and the Mighty (1954) to be released on video. The list goes on.

Copyright's Current Problem

These changes to the copyright law and the resulting stockpiling of intellectual property do nothing to promote the progress of the useful arts in the United States. Despite the wealth of protection offered by current law, many content creators believe that copyright law does not do enough. Or, at least, current law cannot be enforced to the extent needed for the protection works in the digital realm. In the end the only group that suffers--We, The People--is also the group that remains unrepresented at the copyright conference table.

The Constitution did not intend to grant long term monopoly over IP. Instead, it sought to provide limited protection and encourage continued production. This limited protection has been far exceeded. Instead, the content lobby has effectively gained a lifetime+ monopoly. In the event that works are not properly managed, we lose access to them forever when the originals are lost or destroyed. The Constitution intended that Americans have access to the intellectual creations after a limited period of time. This is how we document our history. This is how we remember the past. This is how we inspire the future.

Enter DRM, Stage Right.

As if lifetime-plus protection was not enough, the content industry is concerned the current copyright law is not being effectively enforced. Their stronghanded efforts to kill Napster served only to open a Pandora's box of unmanageable P2P networks. Hollywood and the RIAA, understandably, want these threats minimized. It can't be done easily. In an effort to wrangle control back to content providers, we are beginning to see the growth of Digital Rights Management (DRM) technologies.

Whether they are embedded in digital music, transmitted as a digital watermark or broadcast flag, or built into new computing technologies, DRM seeks to limit the ability of users to duplicate protected works. A song or movie might die after a single use. Or it could be crippled to prevent duplication. It could limit playback to select devices. Maybe it will save content... but there is a hidden danger in DRM.

We might lose our content forever.

As time goes on and businesses go under, we run the risk that the keys to unlock our current works will be unavailable for future generations. Coupled with the fact that copyright protection no longer requires registration, our new digital works lack one of the things that saved many of the works from the Nitrate-era: well preserved copies locked away in protected vaults in the Library of Congress.

Certainly format changes result in lost (or unusable works). It's tough to find an 8-track, even if you have a tape. The VCR is getting harder to find. However, between generations there was the possibility to convert the work to the next media. Likewise, it is technically possible to build an 8-track player to retrieve content from old tapes.

With DRM, however, this is not the case. Even if a future generation were able to rebuild a MiniDisc player, iPod, etc., the DRM'd files could not be played. (Sure, it can be argued that the DRM may be crackable, but it hasn't happened yet, and there is not reason to doubt that stronger encryption technologies are on the way. Microsoft, for example, is developing secure computing technologies that would lock you, your hardware, software and all content under the control of the All Powerful.)

There is a danger, especially if the original works are lost, that the copies in the wild will be unusable. Instead of bits of brown dust, we will have nothing but unusable bits of 1s and 0s.

As a solution, it is essential that we change copyright law.

It's time to move backward on the copyright timeline. We must attempt to return a system intended by the Founders.

First, require copyright registration. As a part of this process, require that an unencrypted "original" be filed with the copyright office or Library of Congress. If media is released with DRM technologies, require that a master "key" or algorithm be filed in a similar fashion. Guarantee that, once protected works fall into the public domain, they can be unlocked (even if the keyholder now loger exists). Write legislation that will prevent the overthrow of copyright law with click-wrap and contract agreements.

Second, re-limit copyright terms. Disney stole its ideas from past works. Heck, even Shakespeare borrowed a few concepts. It's how we grow as a society. We look at works like It's Pat: The Movie and realize our past mistakes. No law professor can write an article without using the ideas of his predecessors. Judges can't write new law.

It's time to return to the concept of granting limited protection along with re-registration (including increasing re-registration fees). This renewal system will ensure that there is a valid contact should someone desire to license content It would serve as a means to know, for sure, when a work becomes part of the public domain.

Third, enforce the law. Tommy O'Reardon is not alone in the belief that copyright law should be enforced. But we need to make sure that the laws are appropriate and fairly enforced. Ensure that there are no strong-arm tactics used against alleged infringers. Punish those who mass distribute copyrighted items. Encourage payment and licensing of protected works. Protect fair use. Encourage legal, limited sharing of content: we grow as a result.

It is essential to ensure that We, The People, have access our history as the Forefathers initended. They wanted to protect us from the "letters patent" that granted monopoly powers at the hands of a monarch. We need protection from the looming threat of the Content Monarchs and their control over the copyright process.

History belongs to each and every one of us, and we have a right to the use of past works. We must learn to respect the works of the content owners, and they must learn to respect their fans and the American people.

We must ensure that a record of our past is not lost forever, because "[t]hose who cannot remember the past are condemned to repeat it." (George Santayana).

The Glass is Half-full in a Post-Grokster World

After a semester of being considered out of touch with reality and unwilling to look at the practical realities of the modern era of copyright  I am now finally starting to understand the outrage of copyright “minimalists” – they just want to be able to share their recipes. It makes total sense; Fred Von Lohman is fighting for the right to be able to lend the world his personal diaries and to share with hundreds of college kid everywhere his music collections of indy-label garage bands. So where I am I going with this you ask – either one side really does want to share cookbooks over the internet or they are being just a little disingenuous in this copyright “war.”

I’m constantly reminded that these “minimalists” aren’t pro-pirate, but that they are pro-technology and even “pro-culture”. Lawrence Lessig is fighting this battle because as he has said, “never in our history have fewer people controlled more of the evolution of our culture.” I’m willing to concede that point, but does that mean that he supports the masses who use Kazaa-like servers so they can save 15 bucks ignoring the controlling “few people” who tell them they are breaking the law? Mr. Lessig lauds the EFF with praise, I just wish he would agree then with Mark Lemley – this isn’t about suppressing culture through the suppression of technology, rather this fight is one worth fighting in order simply to restore copyright protections to pre-p2p levels. In addition Mr. Lohman ardently believes that there is no reason to disturb Sony as it has worked thus far promoting the interests of consumers and content producers alike (this apples to oranges rationale just doesnt work). Looking through all the smoke and mirrors that both sides of this battle put up so they can be seen as the pro-consumer party, there’s a revealing way to look at all the parties involved. Anyone who has an opinion on these issues know that the future of illegal p2p now is up to the directives of the USSC and as far as I see it there are three different possible demographics of those who think a Grokster loss is just the worst thing that could ever happen….

First, we’ve got the people that see no excuse for restricting technology despite the fact that it is being used for illegal means (commercial distribution of copyrighted materials). Despite the fact that anyone with a brain knows that while Grokster is capable of substantial non infringing use, Grokster is/was being used almost exclusively for infringing uses, this first group believes that the innocent p2p technology should not be a victim (coincidentally these people who are upset about the loss of p2p are probably the same people who use p2p for infringing use – just a guess).

Second, we’ve got those people who believe that music should be free (I actually believe there’s a good argument that Larry Lessig belongs in this group – evidence you ask, his whole book Free Culture is premised on the fact that copyright-circumventing “borrowing” was done in the past and it has led to innumerable modern day marvels). These modern day hippies believe that they have some god-given right to be able to free ride. I won’t even try to rationalize this group – everyone learns in basic history class that communism fails miserably.

Third, we’ve got those people who think a Grokster loss is unfair because there is no telling how many cooking recipes will fail to gain the world-wide publicity that they fairly deserve (hint – this is the disingenuous group, because while most try to place themselves in here, common sense dictates they are really a category one or two).

So, where do you fit Mr. Lohman? Let me guess you’re a category three. You think p2p servers should thrive because you believe everyone should have their rightful access to noncommercial materials – and so by my account you are representing the hopes and desires of about 1000 people (that’s a liberal figure). Now, I don’t think there is anything wrong with the people who want to share their recipes and in fact its great if technology will thrive based upon the growing demand for servers to make easily accessible recipes. Therein lies a looming problem – nobody wants Grokster to live for this morally-justifiable reason.

An argument that I would guess Mr. Lohman would take issue with is this: let’s make cop-killer bullets legal. Everyone has the right to use them. I mean come on are you just the dumbest person alive, cop-killer bullets are capable of any number of substantial noninfringing uses and if we disallowed them, there’s no telling how much creativity/innovation we would drown. We are allowed to hunt and in addition, the target shooting industry is a legitimate multi-million dollar industry. Yes I realize that cop-killer bullets are hardly ever used for noninfringing uses, but they have the capability… I absolutely do not mean to suggest that the pro-p2p/“minimalist” crowd’s motives are this extreme, but I do mean to suggest that for 99.9% of the crowd, their rationales are just as disingenuous. (disclaimer - I know that analogy is poor, but you get my point)

So, now that I’ve offended anybody who has read this far let me propose the reasons why a Grokster loss isn’t the Orwellian nightmare that everyone is trying to convince us of.

Perhaps I’m blatantly misconstruing some matter of common sense – but is seems technology would continue to thrive in a post-Grokster world. However, only for the right reasons….

First, a Grokster loss is absolutely NOT a per se ban on p2p. Rather a Grokster loss is a per se ban on p2p servers that rely on and promote blatantly illegal activity, defend their conduct (or lack thereof) solely with the blind eye defense. If the court doles out rightful justice it will NOT ban Grokster, it will just force them to monitor the use of their product. If Grokster can’t or won’t monitor the use of their product, eliminating the copyrighted materials which they facilitate the sharing of – no sympathy here, byebye Grokster. On the other hand, if Grokster does monitor their site and/or copynorms change and everybody just uses p2p for recipes, indy bands, materials copyrighted under a creative commons-like scheme, and authorized copyrighted downloads, technology will thrive and p2p will thrive.

Second, p2p technology innovation will thrive with unprecedented fervor because the reality is that people like MP3s and realize that a world that combines burgeoning internet technology with something everyone likes – music, is having your cake and eating it too. As a major plus for everyone involved the recording industry is currently in the process of embracing this reality and there is no doubt in my mind that a Grokster loss p2p would elevate this technology even more than a Grokster win.  People may not like having to pay for MP3s now but in time they will be converted - because some recording companies have already signed away their song lists to the likes of Shawn Fanning to use in Snocap, it is a matter of common sense that the remaining major labels will jump on the technology bandwagon. With more music being legally available online, innovators will compete to create the best p2p server available. Moreover, because the p2p servers will be getting paid there is even more incentive for them to create the best possible server. There’s no doubt that illegal p2p servers will exist – but with incentives to innovate so disproportional there’s not a reasonable likelihood that illegal servers will continue to thrive in the mainstream. Innovation is driven by competition, this foundation for copyright protection is incentivized much more with a Grokster loss NOT a Grokster win. Plain and simple, a Grokster loss would demand competition among technology buffs for the almighty dollar – this is an enormous incentive not currently a large part of the picture in terms of p2p innovation.

Third, a Grokster loss would force Larry Lessig to really examine whether a creative commons scheme is desirable, and if it is to continue promoting this potentially useful scheme. At this stage, Creative Commons is being embraced solely by hobbyists, hopefuls, and has-beens. To be honest common sense seems to dictate and I believed that in a world where an artist knows his materials will be stolen and he has no legal recourse, the opportunity cost seems to weigh towards embracing some type of limited creative commons copyright (at least you earn the praise of a bunch of college-aged “leeches”). What does Madonna have to lose in a pre-Grokster world, if she signs onto CC authorizing mp3 downloads of her works 325 million people would take her music instead of 320 million? So in a post-Grokster world we will see whether people really do want to their creations given out, no strings attached. But who knows, maybe we are just a bunch of hippies free-riding along.

Despite my obvious belief that copyright protection must be restored to previous pre-p2p levels I’m not totally unsympathetic to the other side. Mr. Lohman, I honestly do feel bad for anybody who loses something they so earnestly believe in, but just come out and say how you really feel – you are obviously a much more intelligent man than I, but let’s be honest with each other, either you think music should be free or you don’t. Forcing p2p servers to remove copyrighted materials is a way to promote this burgeoning technology – it is not the means to destroy it.

There are certainly many ways copyright law needs to be updated to meet the realities of modern technology – condemning frivolous claims, ensuring the fair use defense, and re-examining the justifications for copyright terms are all among the deficiencies of copyright that modern innovation has forced us to ponder. However, the fact that p2p and modern technologies highlight these aforementioned inefficiencies is absolutely not a reason to crack down on peer to peer – on the other hand that Grokster-like servers enable the circumvention of laws that promote creativity is a good reason.

A Grokster loss, such that it sets the precedent that turning a blind eye is an absolute joke of a defense is not the be all end all to p2p technology. In fact it is quite the opposite. In my view defending the position of Grokster speaks volumes for so called copyright “minimalists.” Instead of wasting their efforts to condemn the (for the most part) lawful endeavors of the content industry which accuses Grokster and its users of circumventing tried and tested means of benefiting the public as a whole, copyright “minimalists” should take the side that is truly pro-technology. If I have come away with anything this semester, studying both sides of the debate has taught me that anyway you slice it, being pro-technology does not mean having to be against the industries which create the content, which spurs the technology and arguments to the contrary are just a little disingenuous.

The future of copyright is anybody’s guess but we all know that the ruling next year in Grokster will have unprecedented implications on the future of copyright. I just hope the Court sees that copyright laws are in place because they promote the best interests of all involved. Overturning the Grokster decision is not only the best way to promote the arts and sciences, it is the best way to promote peer to peer technology.

What the Future holds for Sports and Copyright

This semester has opened my eyes to the multitude of copyright and IP issues prevalent in the sports world, and the huge and lasting impact these issues leave behind.   New technology is continually affecting all sports, making information and viewing available to fans through several different mediums - no longer just TV and radio.   In particular, the Internet is rapidly advancing the progress of sports technology, while simultaneously sparking a number of copyright infringement issues.  In order for both the sports industry and the copyright owners to benefit from the remarkable potential the Internet holds, the two sides need to strike a balance - one that will require some give and take on both ends. 

All professional sports leagues have been notoriously stubborn when it comes to issues of copyright infringement - after all, it is how they make most of their money.  But they often fail to look at the big picture; compromising on certain issues would actually increase their revenue, if they could find a way to appease the fans and the "infringers" (TiVo, espn.com, Yahoo Sports, fantasy football leagues, video games, professional photographers, even Vegas hotels, to name a few).  Often, the alleged copyright violations are incredibly lucrative ideas created with the sports fan in mind.  Sports leagues and franchises will need to approach these ideas with much more of an open mind in the future - and doing so will allow for a new era of sports to emerge.

As far as the current status of copyright in sports, progress is being made - very slowly.  For every settlement and agreement reached between sports leagues and copyright "infringers," there are ten times as many lawsuits with immovable parties on both sides.  I think this is due in part to the fact that many of these technological advancements have not been the product of a gradual progression.  Most took the sports industry by surprise, and rather than welcoming new ideas and concepts, they felt threatened and defensive.   As such, they pushed hard to make sure no one else was getting a piece of their profits.  What they didn't realize was doing so only opened the door for criticism, and shed a negative light on the industry. 

Fans viewed the sports world as overreacting, and didn't understand why leagues and franchises would want to restrict their use of "real time" gamecasts on the net, or tell them its illegal to TiVo a football game and tape it for their friends to watch later.  This made them resentful and resulted in lost profits for the leagues.  On the other hand, the leagues and franchises did have a valid argument: there were definitely copyright violations occurring through the numerous mediums mentioned above.  TiVo resulted in unauthorized distribution of games in areas that had been "blacked out" due to a lack of ticket sales, websites using real-time gamecasts were transmitting copyright information (and profiting from it) without a license, Vegas hotels broadcasting the Super Bowl in 7,000 seat venues was a violation of the NFL's telecast copyright, sports video games were using music clips without permission of copyrighted music compositions, and fantasy sports websites were providing web users with player statistics databases, infringing on the players' right of publicity.  Basically, the arguments were valid and the copyright infringement issues were real.  The sports industry was (and still is) being cheated, per se, out of profits that are, technically, rightfully theirs. 

However, I believe the future of copyright in sports looks brighter.  The publicity from all of the above mentioned issues has forced people to recognize what is happening in the sports industry, and also makes them realize what they can and cannot do.  There will undoubtedly be more copyright infringements in the future, but with a better understanding of technology, its impact on the sports industry and its potential for revolutionizing how we "watch" sports, there will be less and less infringement litigation, and hopefully, an attitude of compromise among sports leagues and franchises and those parties guilty (whether purposeful or not) of copyright infringement. 

Copyright Reform: Grand, Sweeping, Small Changes

Like, well, everyone else in class, I see very little constructive change on the horizon in copyright law. But this is for a variety of reasons, not just because constructive changes are extremely difficult to come up with. The nature of copyright in the 21st century is intrinsically tied to the nature of the information economy—and every year, our economy becomes more and more information- and service-oriented. The role of copyright in such an economy is of vital importance, and perhaps that’s why copyright is getting so much attention both in academia and out.

Despite not having found a silver bullet solution in class this semester, there seem to be some good ideas for interim methods of keeping the copyright playing field fair. With the Grokster decision now looming, copyright is set to shift significantly in one direction (more restrictive) or another (less restrictive). But even with important Supreme Court decisions on the horizon, copyright will continue to need fine-tuning. And while fine-tuning goes against my more anarchistic “free information” nature, small steps are more practical and achievable in today’s industry-friendly climate.

Attorneys’ Fees or Punitive Damages for “Fair Use” Defendants
As mentioned awhile back in class, attorneys’ fees are an interesting solution to a specific problem—namely, the failure of Fair Use. Fair Use was specifically put in place by Congress to legalize a wide variety of infringing actions. As such, a Fair Use defense should be first and foremost when it comes to copyright litigation.

But Fair Use has fallen to the wayside, not because of a flaw in the law, but because of a flaw in the system. When a Fair Use argument clearly applies, and would most definitely result in a judgment for the “infringing” defendant, it gets squashed before trial by the threat of legal costs. $250,000 to defend a 7-second snippet of a TV show in the background of your movie would, and should, seem excessive to almost any defendant, but copyright law provides very little protection in this area.

Granted, 17 U.S.C. section 505 does allow for attorneys fees to be awarded, but the allowance is by no means guaranteed, and the hope that attorneys fees would be rewarded is a big risk to take.

The solution might be an amendment to 505, not simply allowing but mandating attorneys’ fees in cases where Fair Use is a clear and applicable defense. Thus a defendant who relies on Fair Use can also rest easier knowing that, in especially egregious cases of copyright owners overstepping their bounds, bankruptcy can be avoided.

Another semi-solution (and one whose implementation I haven’t quite figured out) is somehow raising Fair Use from a valid defense to a removal of copyrights altogether. Rather than take the approach that there was infringement, but a defense exists, Fair Use could instead say there was no infringement period. The point may be subtle indeed, but if there is no cause of action at all, a defense does not need to be raised and no suit could even be brought. This approach would necessitate a much greater overhaul of copyright, however, in that every type of Fair Use defense would need to be written directly into the statute that discusses the infringement against which it is used.

The downsides of both of these Fair Use-oriented approaches, is, of course, the chilling of valid litigation. But given that lawsuits in copyright are hotter than ever, it might be worth the risk to see if such adjustments would benefit the community as a whole.

Anti-Harassment Statutes
Another idea, one not mentioned in class, is outside the realm of copyright and perhaps an anathema to the entire legal profession. Right now, legal teams at production studios, music labels, and publishing houses send out thousands of cease-and-desist letters every year, warning infringers of the dire consequences of their apparently unlawful actions. But these letters are often scare tactics designed to achieve a quick and easy solution in favor of the copyright holder. Sadly, the actual legitimacy of the claims are often wanting (see this interesting anecdote, and note that Nintendo apologized and sent gifts), so maybe a harsh fine (in the range of $10,000 or so) to the lawyers or corporations issuing such obviously false letters would be in order. It seems to be a matter of legal ethics, and given the murky nature of copyright law, most cease-and-desists would undoubtedly be at least technically legitimate. Still, the threat of a fine for the brazen harassment of any and all persons who reference your copyright might provide some relief.

These are just two thoughts, both with fairly significant downsides and in need of further refinement. The overall point, though, is to adjust copyright so that the day-to-day existence of someone who deals with copyright from the user side isn't so scary. The big, sweeping changes are out of reach right now, if only because copyright is too complex and the medium it regulates is very much in flux.

But I think at the end of the day, copyright law is still malleable, if done in small steps. It can be adjusted by courts and by Congress and though the political tide has turned towards industry, it may turn towards innovation again some day. With the help of technology, the tide may already be turning.

Impressions on Copyright

Here is a list of some of what I have gleaned from this course; it is by no means comprehensive.  Here are some of the issues about which I feel strongly:

Structure:

People have a right to make money most any way they like; and while ours is not a system of hyper-capitalism that much is, and should be, allowed.  Exit compulsory licensing and music socialism, neither of which could work anyway.  If you taxed products like blank CDs, etc, a compulsory licensing type system might work; but such a system would be ideologically flawed.  You would have legitimate users paying for illegally file sharing, at least in part.  Uses may no longer be “illegal”, but only because the system was changed to make them permissible.  To do so would essentially allow illegality as long as someone paid for it; to do so would violate fundamental principles of personal accountability implicit in our system.

As far as encouraging artists to create:

To assume that people may still play music despite the lack of IP protection is probably fair.  To assume that the breadth of music available to us would still be available if artists could not get rich selling their music is to live in fairly land.  And not only the breadth, but the “quality” for lack of a better word, would not be near so extensive.  Musicians would lack access to fancy recording studios, and the accompanying fancy sound devices.  The inability to make money selling music might mean that experienced music producers would become an endangered species, and the pool of people who can effectively edit, mix, or even recognize quality would be limited to the freakishly talented.  Sure some people may make a living promoting and organizing live shows, but the skill set for such a career seems to emphasize crowd control and promotion, not editing and recognizing sound quality.  Resources necessary for creating a quality product would only be available to musicians who made their fortune by means other than the sale of music…so we could all listen to “The Strokes”, but the list would not extend much farther.

Regarding Copyright Terms:

I believe that IP rights afford too much protection as firmly as I believe that IP rights should prevent things like illegal downloading.  IP should be limited not in the scope of rights it provides its holders, but instead in the scope of people to whom the rights are available, and the duration of the rights so extended.  I do not mean to imply that everyone is not entitled to copyright protection; I only mean that people who decide, or otherwise fail to renew such protection should not remain protected: maybe somebody else can do “it” better, let’s give them a chance. 

Clearly copyright terms are overextended.  IP rights should cease at some point BEFORE what might as well be referred to as “hell freezing over”.  While shortening them would help, and may be necessary, the length of the term may not be so much of a problem if the renewal of copyright was not compulsory.  The law could allow the first renewal whenever requested and as many thereafter if the copyright remained profitable as determined in reference to some percentage of the investment or $X, whichever is higher.  This way, even if there is no definite copyright term, the Constitution is not violated; terms are still “limited”, even if duration may in theory be capable of extending indefinitely (I am pretty sure this could never actually happen).  Charging some nominal fee for subsequent renewals is not a bad idea; the funds could be used to maintain online registries or copyright offices (as noted in a previous Copyfutures discussion). 

People could renew, if their copyright remained profitable, and could thus continue to make a living off of their one moment of inspiration.  Big studios might not renew; the pipeline of new and better will siphon off the need for the old and hardly profitable…and we will all be reminded that one man’s trash is another’s treasure.  The swelling of the public domain will provide people the inspiration of protected works and prevent a sort of IP “theft” that is as significant as robbing people of their ability to make a living selling music.

The future:

“What technology taketh away, technology giveth back”.  New wireless devices will make the need to own a hard copy of songs obsolete and in so doing usher in the rise of the subscription service.  Sure, in the short term, personal servers seem like an answer that would allow people to access all that they could want; but in the long term people are going to want access to more, and more diverse, information.  There will be no need to store a copy of every bit of information, when nominal subscription fees can grant you the same access.  Eventually, personal servers will only contain the confidential.

Legislation and Legal Remedies:

While technology will eventually get the music/movie industry to stop complaining, I believe that those industries should be able to enforce their rights now, through litigation.

I also believe that it is reprehensible to ruin the life of a 12 year old kid for the sake of “educating” the public-at-large (even if the ruin is created by a settlement).  The RIAA/MPAA is not endearing itself to anyone.  Anybody that knows about the lawsuits filed also knows that pirating music is wrong; bringing suit against culpable but generally decent people only fosters resentment and a desire to do the industry ill.  The suits probably encourage more pirating then they prevent.  If the RIAA/MPAA is going to prosecute, as is their right, they should make sure that the people they sue not only know that they are doing wrong, but make a living or profit (and NOT the saving-of-$50-worth-of-songs kind of profit) off of the material they plunder.  Public outcry should not be the only impediment to unabridged prosecution; parties using legal remedies need to exercise some sense of decency as should the lobbyists.  Money is to legislators what Snausages are to dogs; we all know they can not help themselves, but deep down we all also know that legislator focus should be squarely on things like unemployment, etc, etc; issues exponentially more pressing than whether, or how, we should punish some college kid for “inducing” his buddies to copy a track of “Crush” from his Dave Matthews collection.  The fact that the proposed legislation largely failed to pass does not change the fact that legislators should have not had their attention diverted in the first place.

Can't We All Just Get Along?

All our discussions, ideas, questions, and grumblings could be all moot by next year depending on what the Supreme Court decides in the Grokster case. It has been entertaining discussing and debating the future of copyrights and basically deciding that we do not know, nor does anyone else. All the theories like musical socialism and ways the entertainment industry and p2p can coexist have come up with some good points but also contained some major flaws. Is there an equitable solution? Perhaps the Supreme Court can find one that no one else has been able to find or they could add on to the problem or even worse, create a completely new set of problems. Only time will tell.

Who really is at fault for this copyrights battle? Is it file sharers? Napster? The record industry and artists? I can’t really say but I do feel as though the record industry opened up Pandora’s box when they shutdown Napster. Perhaps those old people in charge did not fully understand how the internet worked and were not familiar with this new technology. (I still don’t think they understand today) Obviously they did not realize how easy it could to create a file sharing program and mass distribute that so that everyone could use it. If a nineteen year old could create Napster, imagine experts creating a more sophisticated program and that are exactly what has happened. Napster was a gold mine for them to take control of and use it to their advantage. Napster had valuable information of millions of users that the record industry could have used and profited from. Now they are not only fighting one business or corporation but millions of small businesses because a personal computer can serve as a creation center and distributor.

So what now? What possibly can the entertainment industry do to stop copyright infringement? I have some ideas but it is going to take some time to develop. I do not think there is one quick way to resolve this issue even with when the Supreme Court decision comes out.

First of all, they are going to have to realize that they will not be able to stop p2p sharing. No matter what they do, some form of theft will occur. So they will have to work with p2p and finds ways to manipulate p2p instead of eradicating it.

A deal could be struck with ISPs and entertainment companies to have a monitoring system. Something similar to what goes on at universities. But this seems highly unlikely.

I know we talked about this in class, and it would take time, but it could work if they were willing to persevere. The entertainment industry could strike a deal with the hardware companies to install software that will recognize and only play music or videos that comply with copyright laws. This could take 5, 10, or more years but they failed to see the long-term effects of shutting down Napster. Copyrights is going to be a long drawn out battle. And studies have showed that the music industry has not lost that much revenue since p2p has been out. In fact there are other reasons why the decline in profits has happened such as rising cd costs. Then the argument is well what about pre-existing hardware that plays copyrighted material. Well, 20 years from now, eventually, people will need to get the new technology to play the present music or dvd or video. No one really has a tape recorder or going back even further, A-track tapes. Beta is long gone. So if people really want to protect copyrighted material, then they are going to have to change the technology even if it takes a long time.

Online music is gaining momentum and could foreseeably take control of most of the music sales. Record companies could abandon cds altogether and go strictly online. Then they can encrypt the music that goes out. They could also do something similar to what Apple and iPod does that if you download from iPod, you cannot transfer that but only can play that song on your iPod. Record companies could venture with hardware companies so that the hardware will have to comply with the software. This is similar to my suggestion above about changing the technology.

These are some of my suggestion. In all honestly, I have no clue what I am talking about. This is such a complicated issue with so many variables. You think you found an answer but then all these questions and problems start to pop up. I want artists to be paid but I also do not want p2p to go away. Can’t we all just get along?

GOOGLE’S LIBRARY PROJECT AND COPYRIGHT TERM LIMITS

CNET (click here for article) has just reported that Google plans to expand their search abilities to include books by working closely with 5 major libraries to digitize books to be searchable by Google. Google plans to offer entire texts of public domain works and only biographical information for copyrighted works all at no cost to participating libraries. 

Needless to say, libraries and preservationists are elated in knowing that someone other than themselves will undertake this painfully slow task of scanning each book and making it available electronically and prevent it from fading into obscurity.  Students, scholars and patrons will benefit from being able to search the text of the scanned materials.

It’s currently uncertain as to how Google will proceed with copyrighted works but public domain works are fair game for digitalization.  Because the future of copyright law is somewhat uncertain, it will be difficult to predict how expansive Google’s library project will be.  For now, copyrighted works are locked up for life + 70 years or 95 years in the case of corporate authors.  (Click here for a copyright term chart).  There is also the “orphaned works” (click here for article on orphaned works) problem where after passage of such a long period of time, it becomes difficult to identify and locate the true owner of the copyright for licensing purposes. 

Current developments in copyright law like the proposed Eldred Act (which would change the copyright term to 50 years renewable for a $1 fee) would certainly provide some incentive for Google as well as content owners to monitor their copyrights because copyright protection under the Eldred Act is shorter than existing law (and hence failure to renew will allow the work to enter into the public domain). 

Scholars like William Landes and Richard Posner (click here for their paper) as well as Joseph Liu (click here for his paper) suggests the value of copyrights decline with time.  Landes and Posner goes further by suggesting that copyrights be indefinitely renewable and suggests that copyrighted material will enter the public domain after sufficient depreciation of the copyrighted work makes it no longer feasible to seek continued protection.

However, under current law, works that provide no economic value to the owners would still be tied up (and hence the orphaned works problem that fed the efforts of Brewster Kahle and Rick Prelinger) in copyright protection.  Hopefully, owners of depreciated works would see the social value in allowing Google to scan their works and preventing it from fading into obscurity.  With the potential benefits to Google from this project and absent any further term extensions, you can bet that Google and people like Eric Eldred will be waiting for copyrighted works to enter the public domain.

If this proves successful for Google, I suspect Google will use its enormouse financial power to help fend off any future efforts at copyright term extensions.

The Copyright Registry - How It Could Work

I. Introduction

Even though P2P has been a huge subject of discussion in class this semester, I choose not to focus on this in my last post. The reason is, that it is very uncertain how P2P is going to affect the future of copyright, and even if it is going to affect the future of copyright. In stead, I choose to focus on an idea, that I actually believe could work, that I believe could help improve copyright law.

P2P isn’t the only problem in copyright law today. It is also a problem, that tracing and transaction costs are way too high. If someone wants to make a movie where pieces of, for instance, old movies are used, tracking down the copyright owners of that piece of movie can be extremely difficult and costly. Or if someone has a good idea for something new, like Eldred, who wanted to make a website with non-commercial publications of public domain works, the current system is also a problem. Because of very long copyright terms, a lot of works that doesn’t even have any commercial value, doesn’t fall into the public domain until many, many years after they have been forgotten.

In this post I will recap and elaborate on two earlier posts I wrote about the copyright registry judge Posner has suggested (read the posts here and here). Judge Posner suggests that we bring back the copyright registry, where an owner registers his rights, and has the possibility of renewing the copyright term, perhaps for an unlimited number of times. You can read the post Posner wrote that I first commented on by clicking here and the paper that he wrote together with William M. Landes on the subject by clicking here.

Having to renew your copyright means that a lot of works of no commercial value would fall into the public domain after the first term.

I believe that Posners idea of the copyright registry is fundamentally a good one. But I also believe that it needs a few adjustments in order to work most efficiently and to not conflict with current law.

II. Avoiding Conflict with the U.S. Constitution

In their paper, Posner and Landes argues, that it makes most sense economically to have indefinite renewal terms, where the owner can renew his copyright for as many times as he wants. This does, however, create constitutional problems. Article 1, section 8, clause 8 of the U.S. constitution says:

"Congress has the power to promote the Progress of Science and useful Arts, by securing for limited times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."

They keyword here is "limited". Limited doesn’t mean limited until next time you renew you rights, it means that Congress has to make sure that your right ends at some point.

Furthermore, unlimited copyright does not promote the progress of science and useful arts, and it might even be a violation of the 1^st amendment.

Therefore, there has to be a maximum as to how many times you can renew your copyright.

III. The Number and Length of Terms

Posner isn’t very specific as to how long the terms should be. In his conclusion, however, he mentions that the initial term should be around 20 years or so. 20 years is of course a lot shorter than today, and it would make a lot of works fall into the public domain much faster.

But as Professor Solum told us in class, studies show that most new movies, has no commercial value after 3 years of their release. After that, their owners really have no interest in them anymore. Wouldn’t it make more sense to make the initial term 3 years then? 3 years seems a bit short, but 5 years could be a reasonable term. The only problem with the 5 year term is, that it might be difficult to get the RIAA, MPAA and APA to go along with it. However, if they have the possibility of renewing their copyright for several terms, they might not put up much of a fight.

The next term could be longer, for since you have gone to the trouble, and spent the money, of renewing your copyright, your work must be of some commercial value. The renewal terms could be 10 years each.

Since the number of times, where you can renew your copyright has to be limited, it has to be decided how many times we’re talking about. If a proposal of a copyright registry has to have any chance of being passed by Congress, the maximum duration can’t be very much shorter than today. I would like to see a maximum duration of 50 years, but if it has to be passed by Congress, 100 years seems more likely.

IV. The Registration and Renewal Fees

I discussed this in details in a previous post so I will just go over this briefly. To avoid that new artists cannot afford to have their work copyrighted, there shouldn't be a registration fee. But a renewal fee of about $100 seems reasonable, for if someone wants to renew their copyright, it must be because it has some kind of commercial value.

V. Who Should Manage the Registry?

The argument has been made against the copyright registry, that there is no one to manage it, and no money to finance it.

But today, there already is the possibility of having your copyright registered in the U.S. Copyright Office. It just isn’t mandatory. A lot of people (and companies) register their copyright with the U.S. Copyright Office, and they could manage the copyright registry as well.

The financing would come from renewal fees, and if necessary, from the government. But if the registry is computerized, which is the most logical thing to do in today’s modern world, it wouldn’t require much funds.

VI. Conclusion

The copyright registry could actually solve some of the problems with copyright today, and help promote the progress of science and arts.

This is how it would work: Authors (painters, movie makers etc.) would go to the U.S. Copyright Office and register the copyright to their work for free. For 5 years, they would have the exclusive right to their work.

If they wish to renew their copyright after the 5 years are up, they contact the U.S. Copyright Office again, and pay the $100 to get the copyright for their work renewed for another 10 years.

If they don't wish to renew their copyright, they don't contact the Copyright Office, and the copyright is deleted from the registry. The work then falls into the public domain, where others may use it to create new works.

If a person wants to use a piece of a movie for a new work of art, he or she contacts the U.S. Copyright Office and asks, if they have the movie in their copyright registry. If not, he or she is free to use it. If it is in the registry, the Copyright Office can tell the artist exactly who has copyright to the work, and the artist then has the opportunity to contact the owners and ask to use the movie.

So now what?

A semester later, and what have we got?  It seems a little frustrating to say that the only thing that has become very clear is that there is still no solution in sight.  OK, so what does that mean for the world of copyright?  It's hard to say.  I certainly would not want to make a bet on who is going to win this one.  Could it be that the reason things are so unclear is that we are pretty much discussing something that has possible never happened before?  A situation where the "little people", the general public, has the upper hand.  The college students have the entertainment world by the you know what.  That is what all of the fuss is about.  For once, the ones saving money (or making money, depending on how you look at it) are the consumers.  How strange!  Doesn't the consumer alwats get the short end of the stick?  Well not since they discovered P2P software.  Hallelujah!  The shoe is on the other foot since it is the music and movie industry that is worrying about making enough money to "pay the bills".  Has something like this ever happended before?  The power balance has shifted drastically and the scariest part for the industry is that, there doesn't seem to be a way to stop it. 

Sure, people are being sued for illegaly sharing copyrighted material online but everyone knows that after an initial drop, file sharing has since boomed in response to that threat.  Legislation has been drafted and re-drafted and continues to be worked on to find just the right words to scare people into no longer getting their music at home, for free.  Tough battle to fight, don't you think?  Sure, it's wrong.  Legally, morally, it goes against the laws of copyright that exist to protect creative works so that people will continue to produce creative works knowing that those too will be protected (exclusive rights).  In theory it makes sense, it has made sense in practice for a very long time and it has even overcome technological innovations throughout history (piano roll, video cassette recorder etc.).  Then along comes the internet and file sharing.  And a whole new set of problems for the world of copyright.

In the past, when something new came along that messed with the equilibrium of copyright, new parties were brought to the table to amend the existing copyright laws.  With the passage of time, more parties were added to the exclusive group at that table until we end up where we are today.  So who is missing from that table today?  Well, the P2P software comanies are of course no where to be found and are probably not very welcome either.  Also, the consumer, as usual is just not part of the deal.  That is where the crux of this whole issue is though.  You see this time, the consumer, thanks to the P2P software companies, has the big end of the stick.  This time the consumer yields the power because they can circumvent buying the cd or dvd and just sit back at home and with a few clicks of the mouse, they get the material for free, without leaving home.  What to do, what to do?

It seems quite obvious that strong-arming P2P users is not going to get rid of the problem.  The artists themselves do not even seem to be behind the industry 100% and apparently 43% of them think that file sharing is not so bad for business.  The writing of the new legislation does not appear to be going anywhere promising.  I did read about an interesting proposal where the groups could possibly work together.  If the government implemented a tax on related items such as Internet Service Providers and blank cds, a compulsory licensing scheme could possibly work.  The money from the tax would go towards replacing the lost earnings through file sharing.  This way, people could continue to file share and enjoy all of the benefits of it (getting music for free, being at home, only downloading songs that they want as opposed to buying a whole cd to get one song etc.) but the artists would not be discouraged from creating new music due to lack of financial reward.  This seems like as good a solution as any other.  It also seems to recognize that file sharing is not going away and so in that sense it is a realistic solution. 

At the same time, whatever is done, I think should be done quickly.  The sooner, the better.  The reason is that the majority of the population is still quite used to buying cds, renting movies at Blockbuster and watching them on their t.v. and not their laptop, and seeing new movies at the theatre.  What will happen if things continue to drag on is that the idea of watching a movie on your laptop and never buying a whole cd and making mixed cds etc, will become customary.  I believe that now the industry still has the benefit of people being used to the way things are.  That advantage will not last forever.  People will adjust and soon it will not be mainly college students using file sharing but whole families. 

As of yet though, it appears that the RIAA still favors leaving any decisions up to the courts.  What this means for the future of copyright is still very unclear.  It does not seem likely that the courts would be in the best position to determine the best compromise for this type of situation.  The lesson that continues to be learned throughout the history of copyright is that you must get all of the economically significant members on board to amend the Copyright Act successfully.  Now, more than ever, it seems that new technological parties need to be accepted as interested parties as well as consumers as a whole.  It may not be the reality that the RIAA wants to face but it seems highly unlikely that anyone, let alone everyone, will stop using file sharing anytime soon.  So, based on a semester's worth of brainstorming as a class and independantly, it seems that no happy ending is in sight unless every party is heard from and recognized and then possibly a compromise can be reached.

GOING NOWHERE FAST: THE COPYRIGHT IMPASSE

Copyright law, as we know, is influenced by those in the position of power and wealth.  The existing system is reveled and protected by those who reap financial benefits from the system who often justify their position by advancing arguments such as providing incentive to create, providing fair compensation to the owners, preventing theft, and so on.  Of course, copyrights differ in their ability to generate and maintain a revenue stream and hence some copyrights are more valuable to their owners than others.  And of course, value can be defined in many different ways within many different perspectives. But ultimate goal is to protect the existing revenue stream or potential revenue stream that flows from the copyright by exclusion of others to the rights of the work.  Sometimes monetary compensation can provide access to the work, other times the work may simply be inaccessible if the owner chooses to keep the work exclusive. 

                        

We often see the owners of copyrighted works make money from copyrighted works by selling the work (giving up exclusivity) in exchange for monetary compensation.  In other words, those individuals willing to pay for the copyrighted work do so in exchange for being able to legally possess a copy of a protected book, CD, movie, (Fill in the blank).  We also assume the above transaction is economically-efficient (the seller is willing to sell at a price which the buyer is willing to pay) and that market forces will prohibit the transaction from materializing if under the totality of the circumstances, the transaction becomes unreasonable.  For a long time, we know this as the market norm in a capitalistic society.

So why don’t we see the other possibility:  works being held exclusive?  There are many possible explanations.  Major reasons we don’t see this happen is that the owner will market the work when there is a market for the work and nobody will benefit if the work is kept exclusive. The owner does not generate any revenue and the consumer does not get access to the work.  Again, market forces dictate that this is not economically-efficient outcome. 

The reason we have a copyright impasse is that technological advancements allow the production and distribution of near-perfect copies of protected works with minimal efforts.  Works fixed onto paper can easily be scanned and digitized instead of tediously rewritten.  Sound recordings and motion pictures can easily be digitized without a truckload of elaborate equipment interconnected with patch cables.  In summary, emerging technology that makes it easier to copy and distribute content threatens the revenue stream flowing to the industry.  In response, the industry used technological measures, public awareness campaigns and even lawsuits to suppress the use of the technological advances to make and distribute content, often in the face of legitimate uses of the protected work.  In other words, the foreseeable future of copyright law is escalating into an “arms race” where emerging technology that threatens the revenue stream is countered by some technological measure to address the threat and/or criminalization of the activity, which in turn, is countered with a clever hack or circumvention scheme.  Repeat this process over and over again and you have the skeletal model of copyright law as it exists today.

If there is anything we learned from the nuclear arms race and disarmament, we’ve learned that amassing and stockpiling weapons aimed at each other with sufficient firepower to destroy the world many times over worked as a deterrent but didn’t eliminate the threat that the world as we know may be destroyed.  It was only the realization that negotiation, diplomacy, further negotiation, and compromise that lead to disarmament and alleviating the threat of powerful missiles aimed at each other where the only useful purpose is to destroy each other. 

Likewise in copyright law, technological measures and their counter efforts only deter copyright infringement.  It does not eliminate it altogether.  The technological measures that allow CDs to be ripped into digital files and easily distributed make it economically-efficient (but morally wrong) to download music instead of going to the retail store and purchasing the CD.  It is the efficiency and convenience that attracts consumer to the biggest threat to the revenue stream enjoyed by the industry:  P2P file-sharing.

Instead of engaging in a copyright “arms race,” all the relevant players should take note that trying to defeat each others’ efforts will not lead to copyright laws that is at least agreeable amongst the relevant players.  Continuing to outwit and outsmart each other will only be wasteful at best for the parties engaging each other but ultimately harms the consumer, the very same people that the industry needs to market their content to in order to provide the much-coveted revenue stream. 

Like the United States and the former U.S.S.R., the relevant players should employ negotiation, diplomacy, and compromise to design and implement a copyright model that is at least agreeable to the industry, the consumers, the CEA, the artists, the copyright holders, etc. rather than just advocate and vehemently defend a model that only serves one’s own personal interest at the expense of other important players. 

Some have begun to realize they can remain profitable and simultaneously embrace and capitalize the technology that once threatened their revenue stream.  Instead of fighting P2P, they have acknowledge the consumers’ demand for convenience and instant gratification and responded constructively with a wide selection of digital content for online purchase at a reasonable price point.  In my opinion, these are the players that will take the lead and ultimately shape the future of copyright law.

In summary, Copyright law as it exists today is at an impasse.  Any proposed legislation that fundamentally alters the law in favor of one group gets powerful opposition from those the legislation harms.  Human nature and economic forces indicate that nobody wants to be worse off that the existing status quo but everybody wants to be better off (even at another group’s expense).  Because this impasse is significant to the point where it stalls a lot of copyright legislation, I honestly don’t see progress until proposed legislation simultaneously addresses consumer interests, industry interests, CEA interests, etc. which of course, will never happen if the atmosphere of suppression continues.  However, when and if the impasse is overcome, I envision the future of copyright to be legitimate P2P distribution of reasonably-priced content such that there is disincentive for consumers to resort to illegitimate file-sharing and run the risk of prosecution. 

Pigs get fat, but hogs get even fatter?

During the course of this semester, the biggest thing I have taken issue with is the exceptionally long period of copyright protection that is given to copyright owners. Congress originally created copyright protection as part of their Constitutionally authorized power to "to promote the Progress of Science and useful Arts, by securing for limited times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." Under current copyright law, the "limited time" given to copyright owners is 70 years after the life of the author. Here comes the rant..

Let's admit it. Seventy years PLUS the life of the author is a very long time. Under this scheme, I could copyright something when I'm 20 and just sit back for the rest of my days doing absolutely nothing. Not only that, assuming my copyrighted idea was very successful, my children could sit back for their lives and do nothing except reap the benefits of my copyright. So where exactly is the copyright promoting the progress of science and useful arts???

I think there is something to be taken from patent law which is derived from the same exact clause in the Constitution. Patent law gives you only 20 years for most patents. You get 20 years to market, use, and otherwise exploit to the fullest degree your limited monopoly over your patented idea. After that, if you want the money to keep coming in, better invent something new. The duration ensures the patent owner will reap the benefits of his invention, but does not allow him to just sit back for the rest of his days.

My proposal: Shorten the copyright terms. Make it similar to patent protection, 20 years. In my opinion 20 years is plenty of time to milk all you can out of a copyright. In the case of movies, it more than covers the norm of movie release and subsequent dvd releaes. In fact, in the final year, you can release the super-duper-special-20th-anniversary-let-me-get-a-few-more-dollars-out-of-my-copyright release. In the case of music, 20 years would more than adequately cover the lifespan of popular music. Few artists even have the staying power to last 20 years. Case in point, how many bands can you name from the 80s that still tour and put out new music today? I can only name a couple. After the 20 year term, if the copyright owner wants more income, he's just going to have to put out new material. Simple as that.

What about derivative works? Easy. You have 20 years to make them. Again, in my opinion, plenty of time. Let's take movies for example, assuming that 95% of all a movie's profits (theater release, dvd release, etc.) comes in the first 10 years, you still have 10 years to develop a sequel. If you can't develop a good sequel in that amount of time, perhaps it simply isn't worth having a sequel. Would you want to see "Footloose 2"? Or better still, do I need to point to the abysmal failure of "Dirty Dancing 2 - Havanna Nights" released some 15 years after the original?

So all this brings me back to the title of this final post. As the saying goes, "pigs get fat, but hogs get slaughtered" Yet under the current system it seems to be "pigs get fat, but hogs get even fatter" having a copyright term that lasts essentially two generations simply does not comport with the purpose of copyright protection. Having this long of term does not and cannot usefully "promote the useful science and arts." By shortening the copyright terms, copyright owners still have a monopoly on their copyright. But hopefully the proceeds of their limited monopoly will go towards production of new content for the greater benefit of the public. Overall, something needs to be changed and I think the terms of copyright protection are a good place to start looking.

Supreme Court to Hear Grokster case

The title pretty much says it all. The Supreme Court has decided to hear the Grokster case and determine whether P2P companies can be liable for the copyrighted material their users share over their networks. You can read more about it here.

The outcome of this case could cause a major shake up in the world of intellectual property. A ruling against Grokster could mean an end to many if not all P2P services...in their current form at least. Much will depend on how the court delivers the opinion. It will be very interesting how the court determines liability. If only those companies that make a profit from the services will be affected, this could open a window for non-profit P2P programs to still thrive. How much knowledge or intent is needed by the company of the illegal uses of the product. If substantial non-infringing use is still an available buzz word. And how P2P companies are supposed to stop their product if the "horse is out of the barn" argument is true. Will the company be indefinitely liable since the product could be used to share songs or movies in the future that haven't even been thought of yet?

I think the court will construe liability narrowly especially if the Court finds Grokster or other P2P owners cannot stop the product from being used even if they wanted to. Otherwise it would seem the company could be liable indefinitely. I guess there would have to be some sort of settlement to pay off those who are injured and maybe have a fund for those who could be affected at some point in the future. Even if a company such as Grokster went bankrupt it still wouldn't seem to prevent P2P sharing if individuals could still run the program without any oversight by Grokster or another P2P company.

Any favorable ruling for the copyrighted material industries would be at least a huge moral victory and would at least put a kink in the P2P networks. However, I think the only way the music and movie industries will really win is if P2P networks are made illegal. Otherwise you will still have P2P programs out there that are made by people not looking to make a profit off of them and thus you don't have anyone to really sue for mass liability as we do in the Grokster and Kazaa cases. Long term it will still require holding the individual users liable or at least finding a way to curb much of the illegal uses by making legal uses a better alternative.

I think the largest impact won't be from what the ruling itself says, but from the actions that happen in response to the ruling. The largest impacts will likely be more major lawsuits and settlements against other P2P companies if there is a victory for the recording industry. Or Congress will pass some form of legislation on P2P if Grokster wins. Any Congressional rule will either overturn the Grokster decision or it will attack the individual user and then who knows what will happen. Either the Copynorms will change or maybe this could cause such a major outcry that forces Congress to be more P2P friendly. The possibilities are endless at this point. Let's see what the Supreme Court has to say about it first and then the real battles begin.

Companies Offer Legal Alternatives to File-Swapping

An article in the San Jose Mercury News reported about a new P2P company called Mercora.  It is the first internet peer-to-peer broadcast radio company.  The start-up created software which allows users to search other computers for particular songs that they want to hear.   The search engine allows the user to search by title or artist and then tells them where to go in order to hear that song. Then, instead of downloading the song, it is played as a streaming broadcast for the listener.  There is absolutely no downloading of music to hard drives, or burning songs to CDs.   This allows Mercora to comply with copyright law since it is just like a regular radio broadcaster.  Since there are millions of users of P2P networks for music file-swapping, Mercora is hoping to capture some of the market by offering a legal alternative.  The founder, Srivats Sampath, feels his company is filling niche stating that "typical radio is one to many.  Our model is one too few.  In radio, it's very limited genres and selections.  In our model, it's unlimited genres and selection."

Mercora is just starting out and is already doing well by most standards.  It has a music library of almost 10 million songs that can be listened to in CD quality.  The company is also using partnerships in order to increase its business.  It struck a deal last month with Grokster in order to offer free P2P radio for its users.  Grokster Radio will give Mercora the chance to greatly increase its exposure and gain a lot more users.  Better recognition and more users will lead to ways for the company to make money.  The company will allow its base to grow first and it will initially remain free to its users.  The plan is for Mercora to eventually start offering value-added services for which they will charge a small fee.  Grokster Radio will remain free and is also good deal for Grokster, which has been looking for ways to provide licensed music to its users.  Mercora launched its radio station in June and has had steadily increasing growth.  Since the start of the company users have logged over 28 million hours of listening to music.  In November, Mercora had over 450,000 listeners who used their software.  This shows that the legal alternatives to downloading music do have a lot of fans and seem to be here to stay.

A European company also offering a legal alternative to file-swapping is having a good month as well.  Wippit is a U.K. based company which offers a legal download service.  It has secured licenses to distribute music from all the major record companies.  Wippit had already made license agreements with Sony, BMG and EMI earlier this year.  Just this month Wippit struck a deal with the two remaining major labels, Warner and Universal.  This adds over a million songs to Wippit's music library, which can legally be downloaded by customers in Europe.  Universal is limiting its catalogue of songs to only customers in the U.K. and Ireland.  Wippit is a starting company like Mercora which is trying to get a piece of the legitimate music sharing market.  It seems likely that in either America, or in Europe, we can look forward to seeing more companies offering alternatives to illegal file-swapping on P2P networks.

Update: IP Thought Experiment

Per my recent post, I revieved a comment that made me think that maybe my hypo wasn't very clear.  Here's the comment (all emphasis added):

To paraphrase: Someone produces a very cheap chemical duplicator that accepts a substance in pill/powder/liquid form in one end and is able to reproduce it (given raw materials) out of the other end - AND is able to provide a recipe file that can be shared on the web.

This is not inherently wrong, unfair, or unethical. It simply means that the ability for the drugs companies to obtain revenue at the point of sale of the drug is no longer viable - given they can no longer enforce their exclusive control over the source(s) of the drug.

There is something wrong if the compound is under patent, which it is in my hypo.

The drugs companies would then have to adopt a new revenue mechanism, e.g. a subscribed commission. The drugs companies are still the only ones that provide new, tested, improved drugs. There is still a demand for this - despite far cheaper drug production technology.

So it would go something like this: we drug companies are testing 26 different drugs, of which none may turn out to be viable.  Or maybe all 26 will be blockbusters.  We don't know.  But we want you to pay ahead of time because one or some of the drugs may be of value to you.  This seems like an impossible business model.  Or, you could say this already exists, in the form of publicly traded stocks.

I find it strange that people can so readily imagine that a highly valued product (development of new drugs) will suddenly cease to be sold simply because it can't be sold in the traditional way. Anyone who sells anything knows that you don't part with your product UNTIL you're assured that you'll be paid. New drugs would still be developed, but the drugs companies wouldn't reveal or release the recipe until they'd been paid for it.

But drug companies do release the recipe before they''ve been paid for it exactly because they can count on the strong IP protection, as well as the fact that most individuals can't readily make the drugs themselves.  I guess my hypo wasn't very clear, here's what I was trying to get at.

With music, I can make my own album and record it sell it for under $100.  I grab my guitar, sing some songs into my laptop, record them, and sell them on my website.  Most likely, no one will buy my music, but I could do still do this if I wanted to.  When record labels spend millions into an producing and promoting an artist, they are making an investment that they hope will return a greater amount.  They depend on strong IP protection to make this happen.

There is nothing similar for drug companies because individuals, on the whole, are unable to make their own version of prescription drugs in a cost effective way.  This was the case when records first came out: individuals couldn't "copy" records in any cost effective way either.  The "hypothetical" part of my hypo was to get rid of this difference; to remove the technological barrier  the same way it has been removed for "content." 

However, a key difference is that some costs in bringing a drug to market are unavoidable and they run close to $100 million dollars.  Human trials are done at three different phases of drug development and can not be done for less then $100 million dollars.  Only 22% of drugs that enter the human trial phase receive FDA approval.  This makes it very different from "content" type IP where the amount minimum amount spent is low, but the total amount is elastic. 

My point is this: Simply because technology has made it easy for individuals to infringe on IP doesn't make it right.  My hope was that the drug company hypo would offer an example of why this was the case.  There, technology hasn't reached that point.  But if we assume that it has, as I tried to do in my hypo, we can see the obvious bad results.  We can all agree that broad human trials are a good thing before drugs are released on the market.  We can also agree that human trials are necessarily expensive.  We also agree, that if drug companies knew that they could not get that money back, plus the money invested in all the other failed drugs, they would not invest money into developing it.  In this sense, the drug companies are similar to record companies in that they have a "blockbuster" business model.  They research multiple drugs and depend on a few blockbusters to recoup the costs of all the others.

You offered a "subscription model" as an alternative.  Since this is my hypo, let's assume that there is no other viable model for the drug companies to sell these drugs; the current one is the only one.  And remember what Prof. Solum says, "don't fight the hypo!"  Would you still be in favor of such loose IP enforcement if you knew that it would ulitimately lead to less drugs, or drugs that were less safe? 

I would hope not.  Just because some new "technology" came along and allowed people to cheaply "copy" drugs doesn't make it right, or more importantly, even a long term net gain for society.  With "content" type IP we can loosely throw around arguments like, "they'll figure out some other way to make money," or "they never deserved it in the first place" to justify the rampant IP infringemnet that is going on.  Most of the class seems to think that if the content industries flounder, it's no big deal - after all, my favorite artists will continue to make content.  We can't be so casual with the drug industries.  We'll all be old some day; popping 15 drugs a day for the various ailments we'll inevitably have.  I want those drugs around when I'm old dammit, stop trying to screw it up for me!  :)

Failure to Use Copyright Law

Despite all the condemnation of peer-to-peer file sharing by copyright owners it seems that they are doing very little to protect their rights.  Even though they have the law on their side, copyright owners seem to be very reluctant to use it.  The RIAA is the leader when it comes to filing lawsuits and they have only targeted users with huge libraries that are made available to the public.  The RIAA tried to make examples of the people they prosecuted and still continues to file suits against P2P networks but is reluctant to launch a huge round of suits against the millions of people who illegally trade music files.  Just recently in Europe the equivalent of the RIAA filed suits against several hundred users who made large music libraries available.  Just like their American counterparts they threatened more suits, but that has failed to happen as of yet.  The RIAA is not the only group representing copyright owners that has filed suits.  The Motion Picture Association of America is starting to file suits against people who violate copyright by illegal file sharing of movies.  If P2P networks are so bad why is it that the copyright owners are so unwilling to use the law to stop people from violating copyrights?

It is clear that one reason why the copyright owners do not file suit is the difficulty and expense of suing such a large number of people.  Individual copyright owners do not want to go to the expense so it ends up that group representing them file suits on their behalf.  Even though it is difficult to sue so many people, it is not impossible and is an option for groups like the RIAA and MPAA.  So why so few lawsuits against individual violators who use P2P networks?  The main reason is that the very people who are violating copyright laws on P2P networks are also the main customers of media.  People who spend a lot of time downloading music illegally are also the people who buy CDs.   The RIAA does not want to upset this group of consumers for fear that they will stop buying CDs.  That is the reason why they go after only the largest violators and try to make examples of them.  If they tried to sue a huge number of individuals, groups like the RIAA fear there could be a backlash.

I do not agree with the tactics of the RIAA and other groups which represent copyright owners.  They make complaints about how copyright law is being violated and how there needs to be new laws to protect their interests.  Yet, they fail to use the current law to enforce their rights and then continue to push for new laws like the Induce Act.  Their failure to pursue individual violators who illegally trade media creates an atmoshpere of acceptance.  The majority of people who illegallly trade do not feel like they are doing anything wrong.  This is partly the fault of copyright owners who do not enforce their rights.  If the RIAA launched a huge assault against individual P2P users they would lose some customers.  However, if they would also force consumers to move to legal methods of downloading music, such as Itunes, they get royalties.  Media groups like the RIAA and MPAA should take advantage of the current copyright laws before they complain about the need to reform it.

IP Protection: A Thought Experiment

In order for IP to possess value, it needs to be made concrete in a physical medium.  I've categorized IP into two basic types, based partly on how the IP ultimately derives its value when it takes physical shape.  The two types are:

1. IP that has value, regardless of - w/ithin reason - how it takes physical expression.  If you purchase an mp3 tune, you can put it on your PC, laptop, iPod, car sterio, etc. and it will maintain it's utility for you (assuming you bought a song you liked).  This is what we've spent most of our class on; basically, anything that can be considered "content."  You can think of this like cash: stored value.  Trademarks belong here too.
2. IP that requires specific physical steps before deriving value.  Patents belong here.  You'll need, for example, to follow specific manufacturing steps in order to derive value from my newly patented cell phone design.  I know that you can simply resell the design - for a profit, possibly - but here we're talking about how the IP ultimately derives value; at some point someone will have to actullay make the damn thing in order to realize a gain. 

Most of our discussion has been focused on the first type.  Both are important, however, but I believe the second type will eventually stand out as the most impornt for us in the upcoming decades.  My thought experiment is of the second type:

Suppose I have recently discovered a method to cheaply manufacture Lipitor, a chelosterol lowering medication,and one of the best selling prescription drugs on the market today.  All the equipment and base compounds needed are readily available at any scientific supply shop.  The equipment will cost $100 initially and the base compounds will cost $10 the first month and very month thereafter.  Currently, Lipitor will cost you between $140 to $240 a bottle, even at a discount Canadian online pharmacy. I start with the same base chemicals, a different process, and end up with the identical active ingredient (which is patented, as well as their own process).  Also, the process is unbelievably simple!

Pleased with myself, I post detailed instructions on how to do duplicate this proess, along w/ links to sites where the necessary equipment can be found.  I only ask that they affix a sticker on their device that says, "Peter's Home Lipitor Kit!"  (Please ignore any other legal issues here, such as FDA regulations and the like; this experiment is meant only to to focus on IP issues.).  My kit is such a hit that virtully all Lipitor user switches over to "Peter's Home Lipitor Kit."  Lipitor brought in $2.36 billion for Pfizer, accounting for 19% of revenue in Q2 FY'04.  Due directly to my success, Q3 and Q4 of FY'04, saw Lipitor generate only $20 million in revenue.  Moreover, my success has inspired many amateur scientests to experiment on their own home drug making kits with other popular drugs.  So far, home manufacturing methods have been found for Viagra and Prozac, with similarly devastating losses.

Industry leaders focus all their efforts on combatting this new threat.  Some want to step up the effort and sue more sites that host directions while others, fearing that most P2P networks already have millions of copies available,  want to take a more aggressive tactic: lawsuits against individual manufacturers.  The best in Madison Ave. is enlisted to educate the public on how much home drug manufacturing hurts the industry.  Smart and well meaning Law Professors at top institutions write law review articles arguing that the solution is "Medical Socialism."  Scientific research institutions, private and public, protest that taxing things like beakers, flasks,  and pipettes - very common items for chemistry - unfairly burdens them.  The more conspiracy-minded suspect the HMO's are conducting the reserach behind the scenes and leaking the results.  All the while, middle-aged men with high chelostrol hold hands in solidarity, proclaiming, "Yu-shen-ko!  Yu-shen-ko!" "information wants to be free," and "Down w/ith big pharma and corporate greed!"  All are in agreement that "this is the future of medicine."

Most people would agree this type of home manufacturing, independent of safety concerns, should be illegal.  If not, at least you agree that not many of these Lipitor examples could happen in real life w/o big pharma going under and/or the FDA reducing testing standards to near nil.  I argue that this hypo is similar to illegal file sharing in the most important way: Someone is unfairly gaining without payment from the profit-driven efforts of another.  It doesn't matter that the good here is non-rivalrous - the "but for" reason the drug exists is the expectation of profit.  The average cost to take a drug to market is $800 million.  Seven out of ten don't recover their average cost.  If this Lipitor hypo hit the top 20 drugs on market, there would soon be nothing left to copy as R&D funding pipeline dries up.

The content industry and pharmaceutical companies are not identical, but in the hypo, I've removed the biggest difference; making your own Lipitor is only slightly harder than burning your own CD.  Here, all the same logic applies: I own all the equipment, I'm not dispossessing anyone of anything so there's no theft, it's non-rivalrous so no problem of wasting, plus, less people with high cholesterol.  But this ignores the tens of millions of dollars invested in human trials necessary for approval so that when someone (correctly) "pirates" an existing drug, they can take it knowing they won't simply drop dead.  They have essentially gained all the benefits of hundreds of millions of dollars invested in research and testing, as well as the institutional approval of the FDA for free. 

But maybe the big difference is that musicians will make music anyway, because they're artists and will derive personal utility while pharmaceutical companies lack something analogous.  While it's true that there will always be people who make music simply for personal utility, there will be, by definition, less musicians overall, and our access will likely be more limited.  For the most part, the CD's available at Tower Records and the songs available on iTunes primarily represent the effort of the record label.  This is because the majority of the value is derived from making potential buyers aware of the product and making it available for purchase.  Record labels must provide some value add, or bands wouldn't keep signing with them when they can start their own.  Three notable musicans: P. Diddy, Master P, and Jay-Z all started their own labels and have an average worth of about $300 million each.  Big pimpin' indeed.  But they are the exception, not the rule.  The ability to make music and the ability to make money from music are two different skills and the reward structure properly reflects this. 

The Music Industry's Star Witness In Their Case Against Kazaa

As Scott Ford posted earlier, music companies suing Kazaa contend that Kazaa was able to track users that were sharing copyrightinfringed material and were able to stop them from sharing. The music industries contention is based on a label on Kazaa’s website which states that users who share child pornography or other obscene material will be banned from Kazaa. This appears to be somewhat of a res ipsa loquitur argument. If Kazaa says they can ban people then they must have a way to track them and stop them. Scott offered some alternative explanations for this label such as an idle threat to deter sharing obscene material or for legal protection. However, now the music industry is brining an even stronger argument to the table. The music industry has introduced MediaSentry as a witness in there case to prove that Kazaa could track individuals sharing copyrighted materials and communicate with the users as well.

Tom Mizzone, vice president of MediaSentry, contends the IP addresses allocated for Internet service providers in

Australia

can be traced through the "scanners" his company uses to track down sound recordings and user information within the Kazaa system. He added that MediaSentry is also able to detect the copyright-infringing music files made available for download in the Kazaa system's shared folders. Further, Kazaa could communicate with users through the instant messaging program in the Kazaa. This evidence could prove deadly for Kazaa’s contention that  they are unable to track users and that they are unable to stop their use.

The introduction of MediaSentry as a witness brings up several questions, however.

1)      Can Media Sentry really identify copyrighted material on Kazaa? MediaSentry contends that it can identify which users are sharing copyrighted material through Kazaa, however, it will be interesting to see how efficient their system is. The company says that it uses a process of “scanning” to identify which users have copyrighted material, but it is unclear how this process actually works. Is the process a mere visual scan of the file’s title? Or does the scan look at the ID3 tag on the file? Or does it use another system of tracking such as other tags or looking at sections of code? Obviously the more accurate the system, the more damaging for Kazaa, but it is unclear how the method works.

2)      Should Kazaa have to develop or use a method of tracking? Even if MediaSentry can identify which users are sharing copyrighted material, does this mean that Kazaa should have or even could have developed or bought this technology? MediaSentry says their method is something that any other user on Kazaa could do. They contend that any user can look at the shared files of another user and from there identify if copyrighted materials were being shared. This tends to indicate that the “scanning” process is a mere visual identification of the files label. The average user could probably look at a file named “Metallica – Unforgiven” and recognize that it is a Metallica song named Unforgiven and know that it is copyrighted. However, this technique is not full proof especially given the growing number of “spoof” files being distributed by companies. A mere visual inspection would not indicate whether the file was real or a spoof and this could lead to erroneous identification. Further, users could easily circumvent this visual scanning technique by renaming the files to something not as obvious or changing certain characters in the file such as what happened when Napster began cracking down on certain files being shared.

If the “scanning” technique is more complex than a mere visual search of looking at the file name, should Kazaa have to develop or purchase such a means of identification? There are tons of products put out on the market that the manufacturer has no idea how the product will be used once it is sold. There are the extreme examples of guns and other weapons, but even closer to our topic we have video cassettes, audio cassettes, cdr, dvdr, hard drives, flash memory and a plethora of other digital media. These products could be distinguished from P2P since the other products are not as easily tracked once distributed, but is it fair to put a greater onus on the P2P companies just because tracking may be possible? The answer to this question depends on which side of the fence you are on. Kazaa would contend that this process is overly burdensome and not very effective given the methods available. Whereas, the music industry will contend that this is an easy method to employ and given the gravity of the harm, Kazaa should ensure its product is used correctly. There is no simple answer to this question and it appears either side has viable arguments to support their cause.

3)      Can they communicate with them? MediaSentry also contends that Kazaa can communicate with its users through the instant messaging program built into Kazaa. However, having an instant messaging program does not necessarily mean Kazaa can actually communicate with users. Many users don’t even use the messaging system or ignore many messages if they do. The communication aspect seems a small point, however, since identifying copyright infringers is the biggest issue.

4)      Can Kazaa stop users even if they can track or talk to them? The biggest concern with the MediaSentry contention is that even if Kazaa can identify users and communicate with them, can they even stop them if they wanted to? This goes to the horse is out of the barn argument, that once the product is released, there is nothing Kazaa can do to stop it. MediaSentry only claims it can identify users and communicate with them, but it does not say that it can stop users once they are identified. The only evidence the music companies have used to show Kazaa can stop users from sharing is the warning label on Kazaa’s website that states they can ban users for sharing child porn or other obscene material. This is a rather weak argument unless they can actually prove the ability to stop users.

It would seem that since the IP address is used to track the individuals then the user should be able to be stopped by some means. If nothing else the IP provider could disable the user from connecting to the network. But should the burden be on Kazaa to contact the IP provider for every user they think is breaking copyright infringement laws? This seems to be very burdensome and possibly and impracticable method for Kazaa to employ. However, if MediaSentry or the music industry can prove that Kazaa can prevent sharing through a less obtrusive and burdensome means, then there would be more pressure on Kazaa to show why they didn’t use this means.

5)      What should Kazaa be liable for? Even if Kazaa could prevent users from sharing music or other copyrighted files, what should they be liable for? Should they be liable for any way the product was used, reasonably foreseeable uses, or merely the uses they intended the program to be used for? This question will likely be based on the governing law of the land and will liking vary depending on the territory. This brings up another interesting question then of what law should be enforced.

6)      What law to use? Kazaa is being sued in Australiasince that is where the company is located, however, it appears the majority of users are in the

United States

, so which laws should Kazaa be held under? I will defer this question to someone more savvy in the area of international law, but regardless of the law used it would seem to add to the need for international organizations, such as WIPO, to develop an uniform system of international copyright laws to decrease any confusion in the world of cyberspace.

This case could be decisive in determining the future of copyright and the future of P2P in particular. The case is in

Australia

and the holding will not be binding on any other country, but the result will likely influence many future decisions regardless of the outcome. Copyfight reported that updates on the trial can be found at the APC Magazine's KazaaGate blog, which promises "whispers from the court gallery of the world's-biggest-copyright-case for the Internet's most-downloaded-program-in-history...and other hyperbole, nonsense and mischief." Be sure to stay tuned to developments as the case will likely deal with so many issues that have come up throughout the semester. Should be interesting!!

Internet Radio: What does the law say?

Anyone who has ever listened to and recorded Internet radio might be violating Copyright laws without even knowing it.   There is new software available that allows Internet users to record incoming audio streams (basically, Internet radio stations.)   There are thousands of these stations, providing listeners with any kind of music imaginable.   While most people just tune in to listen and enjoy the music, most don't realize how simple it would be to record the music and have it to enjoy permanently.  "With the right software, you can program a PC to connect to a favorite stream and copy it to your hard drive."

The same standard applies to radio broadcasts over the Internet.  "It might be OK to record the Internet broadcast of a favorite opera, so you can listen to it next week. But once the fat lady sings, you're legally obliged to press the delete button."    How can the music industry possibly enforce this law? The difference between recording Internet radio and recording and sharing MP3's is that the former is done in the privacy of your own home, and no one needs to know what or how much music you're recording.

True music collectors would not be interested in most of the radio stations, as the quality of the music is nothing special.  However, there are several stations that are now broadcasting at 160 kilobits per second or higher, which allow for quality similar to MP3 files downloaded off the Internet.  This is where the danger comes in - it seems easy to start collecting and downloading Internet radio music and creating a library, without infringing on any copyrights. 

Steven Marks, the top lawyer for the Recording Industry Association of America has spoken out against this practice.  He stated that "making a music library from captured Internet music streams is just as illegal as downloading pirated MP3 tunes over a file-swapping network."    The 1984 Supreme Court decision regarding the Sony-Betamax case held that while it was legal to record TV shows for viewing at a later time, this did not allow for recording shows to create a permanent library.  "In other words, people who've taped and saved every episode of "Seinfeld" or "Sex and the City" are thieves."

The same standard applies to radio broadcasts over the Internet.  "It might be OK to record the Internet broadcast of a favorite opera, so you can listen to it next week. But once the fat lady sings, you're legally obliged to press the delete button."

The difference between recording Internet radio music and sharing MP3 files is that the former is done in the privacy of one's own home, with no "fingerprint" on the recording to identify the infringer.   In an effort to remedy this problem, music industry executives have began talking to the FCC regarding a "built-in piracy cop" that would not allow permanent recordings of Internet radio.   The music industry is essentially "demanding that the FCC order the high-definition radio broadcasters to add a 'broadcast flag,' an antipiracy system similar to the kind mandated for high-definition television broadcasts."

While this technology would still allow a user to record music during a certain period of time each day, it would prohibit them from making copies of each individual song.  The FCC has not yet approved placing these limits on high-definition radio, but the music industry is pushing hard for "built-in audio anti-copying chips" in all computers. as the practice of recording Internet radio is becoming more and more common.

The ultimate goal of the music industry is to be able to control every recording on every home computer, which seems to many like a violation of their "listening rights."  A recent post on "A Copyfighter's Musings" has commented that "(a)t some point soon, it may be necessary to revisit the wall between audio streaming and downloading."   The post points out the difficulty the music industry will encounter in attempting to put a stop to this "illegal" recording: "given how the sound recording compulsory license for non-interactive steaming services, radio stations can acquire licenses without having to use copy-protection."

Lastly, the blog notes some of the complex issues between social norms and copyright law.  "With Internet radio, a copy is ending up on my computer in some form - whether you call it a stream or a copy, the bits are on my computer. Yet I can only acquire those bits on the condition that I not render them in a permanent state to replay them. " 

Is Subscription Based Music the Future?

Will the Itunes digital music store model replace traditional music distribution?  Maybe not, if a new study by Jupiter Research is to be believed.  Cnet reports on the study's findings, which claim that adults online are more likely to use subsciption services like the new Napster and Real's Rhapsody than to buy songs from Itunes-like online stores.  The study predicts subscription services will build a greater lead over a la carte song downloads in the future.  Other findings - adults have a greater acceptance of the subscription model than teenagers and CDs will likely be around for at least the next five years.  CDs might have some staying power because many consumers believe that a tangible CD is more valuable than purely digital copies of the same songs. 

However, other studies conflict with Jupiter's findings.  As posted last week on The Future of Music, Media & Entertainment blog...

"IMG claims that online sales of physical music media such as CDs will cease to dominate, with the proviso that: "The steady rise of download and subscription revenues will not impact on retail as quickly as some have suggested. Looking ahead, the report predicts that digital downloads will continue to dominate (in terms of the value of sales) against subscription based services."

So who's right?  Will digital downloads win out, or is subscription the way of the future.  First, we have to remember that regardless of the battle for leadership in legitimate online music consumption, the providers of the legitimate services have to make something more desirable than the available free (illegal) P2P outlets.  Maybe the desirability will come from fear of lawsuits or from effective DRM that hinders file sharing.  However, I think success in the near future seems more tied to customer friendly features - low cost, well organized, easy to use services with extensive catalogs and good marketing.  That's how Itunes seems to work.  It has a good image and an easy to use interface.  People think the price is fair and worth paying to aviod the hassle of searching P2P networks and wading through clumsy search engines and bogus/corrupt/poor quality files. 

What does subscription have going for it?  Well, with the right backing it could be really cheap for users.  As Mark Cuban discusses on his blog (in an article previously discussed here on Copyfutures)...

Why in the world haven’t you gone to AOL, Cable and DSL providers and offered your catalogs by genre for 10 or 20c per month, per subscriber? Universal, take a lesson from your NBC/Universal pals. Create a rock channel, an 80s rock channel, a hip hop channel, an oldies channel, etc, etc. Put your catalogs for each genre channel on a server that you control. Go to AOL, et al. Offer their users access to DRM protected music that gives them the same rights as ITunes or the MSN store or whatever makes you feel good at night rights. Price each channel cheap enough that all the broadband or dialup ISPs can package them in marketable solutions with the other labels. Its a no brainer sale. AOL et al, send out emailers and promotions.. “Want the latest rock hits from artists like xxxxxx ? AOL brings you legal peer to peer. Download all you want, check us every day because we add more music every day.

Seems like a good idea.  The bad to consumers - you don't necessarily own the songs.  You don't have a physical disc, just a current account.  If you cancel the account, you could lose access to the songs.  People might not be comfortable with that aspect.  But, people might get a lot more comfortable if they're only paying a few bucks a month for unlimited listening to any music they want.  Maybe the subscription proponents have something here - maybe it's just a matter of finding the right partners for the music companies.  Do we need a Google, AOL, or Microsoft to step in to save the music industry?  Hmmm...

A Seat at the Table

On the same note as our class discussion about the various players in proposing copyright legislation, CNET news recently ran an interview with Philip Corwin, head lobbist for Sherman Networks, the parent company of Kazaa.  The interview contains some brief discussions the Induce Act, a tax benefiting copyright holders, and being heard in the copyright legislation process. 

You really get a sence from this interview how frustrating it must be to have been shut out from much of legislative making process.  When asked about why he thought the Induce Act failed, Corwin responded, 

Neither Sharman Networks nor any of the other peer-to-peer companies were invited to participate in those negotiations. We were just labeled as bad actors, while other people talked about the method and timing of our execution.

His frustration is clear.  It is as though he was forced to stand by and watch as someone else tried to decide the future of his client.  But as we have discussed, this is nothing new.  Those with major interests at stake were originaly blocked from the DMCA discussions as well.  And he is definitely weary of the potential dangers of a secondary liability cause of action being put into law.

It's clear that they'd like to create a new cause of action of secondary infringement that would penalize new technologies and business models. That's very dangerous. Hollywood with its very deep pockets would use a law like that to crush new companies that were guilty of nothing.

But what is most unsetteling about Corwin's position is that the client he represents is still the little guy in all of this.  Kazaa boasts 2.4 million users per day.  But the majority of those 2.4 million users are uninterested in copyright issues and legislation even though they have significant economic interests in the enactment of new legislation.  And until the average person takes some interest in copyright legislation, nothing will change, and it will be impossible to find any sort of compromise that satisfies the content industry, the consumer electronics industry, the p2p industry, and the consumer.  Because as of right now, the p2p industry and the consumer are not at the negotiating table.

So even though he hints that Kazaa may be willing to accept some sort of copyright holder compensation program he is still in a terrible position.  He says that he has, in the past, written policy papers for Congress concerning some sort of IP use fee.  But it is clear that these discussions are still, and it looks like for quite some time, going to be dominated by the major players (the content industry and the consumer electronics industry) leaving the less wealthy major players (p2p and the consumer) without a seat at the table.