Digital Era Legal Battles

Part 1: Napster


by Matthew M. Lug - Tech News Reporter

If you frequently read news about computers and the internet, you may have heard about several lawsuits involving movie and music companies. If you get your news from the media conglomerates associated with the movie and music companies involved, you probably haven't heard much about these cases. While many have been thrown out of court or settled, two in particular will probably be fought and appealed for several months or more: RIAA vs. Napster and MPAA vs. anyone even remotely involved with DeCSS.

Napster

For those of you who haven't heard of it, Napster is a program that allows people to share MP3 audio files over the internet. To complicate matters, it is also the company that created the software (http://www.napster.com/). Here's how Napster (the software) works: users connect to a centralized server and search for what they are interested in. The server contains a database with the names of all files that other users have made freely available for download. Users can then select files they want to download.

Sharing files sounds innocent enough, so why all the lawsuits? Many, if not most, of the songs being distributed through Napster (the software) are copyrighted by major record labels that do not permit distribution of their music in digital form. The unauthorized distribution of such music is commonly called music piracy. This practice is nothing new - music piracy in digital form has existed for at least as long as the MP3 file format. Music piracy in other forms has existed as long as sheet music. Since this is the United States, there are plenty of vague and contradictory laws on the subject, as well as many restrictive policies set by the major record labels that may or may not be based on some or all existing laws (at one time the RIAA web site stated that copying a song from a CD to a computer hard drive was against its policies, but the web page containing this information mysteriously disappeared recently). It only gets more confusing from there.

Fair Use

Central to the recent copyright cases, including the Napster and DeCSS cases, is the concept of fair use. Fair use describes what you allowed to do with information content you have purchased. Under fair use you are allowed to loan a book to a friend or tape a movie off of television, but you aren't allowed to sell photocopies of the book or bootleg copies of a movie. You can quote from a book or other printed source, but you can't claim the work as your own. In general, fair use allows you to do anything you want information content you buy, as long as you don't try to profit from it or prevent others from profiting from it. See http://www4.law.cornell.edu/uscode/17/107.html for the actual wording.

Does fair use cover the use of Napster (the software) and other similar distribution methods? That isn't quite clear. One interpretation of the 1992 Audio Home Recording Act (http://www4.law.cornell.edu/uscode/17/ch10.text.html) is that any noncommercial distribution of music is permitted. Other interpretations of this and other laws result in different conclusions. The main problem is that there is really no difference between the originals and the copies, especially when music is distributed electronically straight from the record company. The copy is essentially another original, and distributing an exact duplicate can be seen as costing record companies sales, and therefore fair use would not apply.

Questions

In order to come to a conclusion on the matter of Napster (the company) and Napster (the software), several questions need to be answered. Is the act of distributing digital music over the internet using Napster (the software) for no financial gain illegal? If so, is it still illegal if the person downloading the song has a legally purchased version of the song in another format? Does the centralized database provided by Napster (the company) constitute the facilitation of illegal activity? To what extent can Napster (the company) be held responsible for how people use Napster (the software)? To what extent are third parties (ISPs and universities for example) responsible for file sharing taking place on their networks? To what extent can record companies control the use of music sold to customers? Are the laws currently in place sufficient to protect everyone's rights? Are the laws currently in place in violation of some people's rights? Can anyone figure any of this out without going insane?

Motivations

It would be much easier to figure out which side is wrong if either side seemed to have any moral or ethical edge. However, both sides have motivations linked to money. Napster (the company) had generated lots of publicity thanks to the estimated 20 million users of Napster (the software) and has received venture capital as a result. There are also claims that Napster (the company) created Napster (the software) specifically to facilitate the distribution of music that was restricted from distribution under copyright. The major record companies exist to make money, and how they make money is criticized heavily. They have been accused of cheating artists out of money, and restricting copyright at the expense of fair use in order to generate sales of the same music to the same person in a different format.

Preliminary Decisions

Even though the Napster case hasn't gone to trial yet, there have been two important decisions so far. The first was on July 26, when a District Court issued an injunction against Napster (the company) that required all music distribution that was in violation of copyright to be stopped by midnight on Friday, July 28. However, before the deadline was reached, the Appeals Court issued a stay of the injunction. Napster's motion for the stay at http://dl.napster.com/napster_stay.pdf summarizes Napster's position in the case. The RIAA's response to the stay on the injunction at http://www.riaa.com/pdf/nap_app_rep.pdf summarizes its case. Both are worth reading if you want a full picture of the issues involved.

The key issue with the injunction is whether or not it is possible to prevent distribution of some music through Napster (the software) without stopping the service entirely. According to the RIAA, one example of how to do this (only one example is given) is to restrict distribution to files whose names have been authorized for distribution by the copyright holder. This ignores the fact that file names can be changed at any time by anyone. Since even the slightest change would cause this method to restrict distribution of files that have been authorized for distribution, this "example" seems unrealistic. In fact, such a system would make the distribution of freely distributable material significantly more difficult. When you consider that the major labels tend to be in favor of restricting distribution and minor labels and independent artists are more likely to encourage free distribution, it would seem rather convenient that the system described by the RIAA would potentially hurt the RIAA's competition.

The Future

The RIAA claims that its recent legal action concerning electronic distribution of music is partially motivated by the threat that Napster (the software) and other MP3 distribution mechanisms pose to the labels' ability to distribute their music through the internet. If nothing else, the Napster controversy has provided a wealth of marketing information for the record companies. Most Napster users fall into one of the following three categories:

  1. People who won't pay for music (who aren't costing the record companies money by downloading music).
  2. People who want to listen to the music before they buy it (but still buy as much or more music than if they couldn't preview music).
  3. People who either can't afford to buy all of the music they want or think the cost of CDs is too high or that the major record companies are evil (unhappy customers).
The only people who change their buying habits significantly because of Napster (the software) and similar file sharing systems are those who fall in the third category - unhappy customers. Companies usually want happy customers, since happy customers spend money. Why aren't customers happy? There's the CD cost argument, which the RIAA counters at http://www.riaa.org/MD-US-7.cfm with an explanation of the cost of a CD. There's the quality argument, claiming that too many CDs contain only one or two decent songs (if any). And of course attempting to restrict copying and distributing music for personal use tends to annoy customers (and has caused several boycotts of products from the RIAA's member companies).

With these concerns in mind, it should be possible to find some way to satisfy more customers while still making money (not that anyone is losing money - CD sales keep rising despite the popularity of Napster (the software)). Electronic distribution should cut costs, since there is no need for a CD, CD case, liner notes, transportation, etc. The only additional costs would be from creating an e-commerce site (which most major labels already have) and developing copy protection schemes (see http://www.riaa.com/Music-SDMI-1.cfm for information on the Secure Digital Music Initiative (SDMI)). Customers could download only the songs they want, reducing unwanted purchases. Downloading from the record company directly rather than through Napster or some other method has added value because quality can be guaranteed and finding music could be quick and easy (and legal). However, since CDs provide higher quality audio and are physical items, pricing for electronic downloads should fall well below the per-track cost of a CD.

So how are the major labels handling electronic distribution? Electronic downloads are still relatively rare, mainly because of the lack of elaborate copy protection and watermarking systems and hardware support for these systems (again, see the above URL for SDMI info). http://thestore.sonymusic.com/ has some electronically downloadable content - at $2.49 per track, with a limited selection of singles available. It is easy to see why people would rather turn to Napster for their electronic downloads. Legally downloaded songs are not widely available, cost more than the average CD track, and often require proprietary software and cannot be freely copied by the user. Record labels will continue to complain that Napster is preventing their electronic sales schemes from working (even before most have been introduced), but how can they prove that it isn't their own fault?

The answer is actually simple - listen to the consumers and work with them rather than against them. Even if Napster (the software and the company) is wiped from the face of the earth, people will still distribute music without regard for copyright - attacking Napster (either one) does not address the source of the problem, which is the consumer. Copy protection schemes will be cracked - it is an inevitability in this kind of technological society. Therefore, step one is to forget about copy protection - it doesn't work (see the DeCSS case for a good example of this). Next, lower the price. If I can get a new CD for less than $10 with a little effort, a single electronically downloaded song shouldn't cost more than 50. Volume sales discounts and flat monthly fees for unlimited downloads would generate sales, promote artists, and satisfy consumers. Finally, put all songs online, not just the hit singles. When consumers have to choose between paying too much for a limited selection of songs or getting a better deal on songs they don't want, disgruntled consumers will be the logical result.

Napster's fate

So how does the need for electronic download reform affect the current case against Napster? It doesn't really. Napster (the company) and/or Napster (the software) will be shut down or not regardless of what the recording industry does in the future. Will either of the Napsters be punished? Probably. Will it matter in the long run? No. When it looked like Napster was going to be shut down, many people simply moved to different file sharing software. It simply isn't possible to stop the distribution of information on the internet.

If you would like to discuss the topics presented in this article, please post your comments to the newsgroup wpi.flame. If you don't know how to access newsgroups, e-mail helpdesk, I'm sure they would be glad to help.

Next week: DeCSS


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