The music industry, MP3 and copyright law

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The music industry, MP3 and copyright law

Whose responsibility does copyright protection lie with, and what will be the implications of the forthcoming Napster court case?

At one time it was easy for the music industry and artists to keep control of their intellectual property. Records were sold and royalties could be take from a share in that sale. Radio broadcasts were easy to monitor and royalties were received whenever a certain track was aired.

As technology has progressed, legal questions have been raised as to how to enforce copyright law. When tape cassettes first appeared there was great concern from artists and music companies over the problems it would cause with piracy. A similar situation occurred when VHS launched onto the market, enraging the film industry. While a degree of piracy still occurs in these areas, the situation has been kept relatively under control, and both the music and film industry have been able to take advantage of new recording formats. But it now seems that the music industry has been caught rather short with the emergence of MP3 and, if it is to be believed, risks losing all control of its intellectual property.

What started off as a simple compressed audio file type has turned into an Internet phenomenon. MP3 is a reasonably quick and simple way to receive music tracks in electronic format, and what worries the music industry is that it has no control over it whatsoever. Anyone with a CD-ROM drive in their PC, connection to the Web and MP3 recording and playback software - which is freely available over the Internet - can record an audio track onto their hard drive and send it to anyone they wish. While this is copyright infringement, it is almost impossible to trace the movement of these audio files, which can then be passed on to any number of people who have a reasonable speed connection to the Web.

While this situation is bad enough for the music industry, it has been made worse by the arrival of software which facilitates the easy exchange of music files between the software's users.

Early last year, 19-year old Shawn Fanning launched a website called Napster.com that offered the ability to download the Napster file-sharing software. Napster basically allows anyone who logs onto the service to open a part of their hard drive to the public in order to share their collection of MP3 files. Anyone else who is logged into the service at the time can then download the files of their choosing directly from the user's PC. Since then, the site has become hugely popular, especially on US university campuses. With as many as 4000 users sharing around 500,000 music files at any given time, the loss of money to the music industry could potentially be enormous.

Predictably, lawsuits have followed, as have copycat services, but Napster believes it is protected against copyright infringement by an act that was pushed through by the music industry itself.

The Digital Millennium Copyright Act (DMCA) was passed as law in the US two years ago as a means to protect the interests of songwriters, artists and movie directors in the electronic age. But what was originally seen as a forward-thinking move by these industries now seems horrendously out of date following the introduction of file-sharing software. While the DMCA gave the courts new powers to enforce copyright protection on the Internet, it also introduced so-called safe harbour provisions. These provisions protected service providers from being liable for copyright infringement if files were being passed between users of the service. It was meant to protect the major ISPs from liability, which could run into billions of dollars.

Napster, however, is using this safe harbour provision against the music industry. It is claiming that since Napster does not hold any of the MP3 files then it is not responsible for infringing copyright law. In essence, it is a service provider that allows users to share files, even if they happen to be files protected by copyright. Furthermore, it provides warnings on its website that copyright protected MP3 files should not be shared, and if it is informed that illegal sharing of files is taking place, it will block the user responsible from the service.

Nevertheless, it is obvious to most that the vast majority of file exchanges that occur over Napster do so without the permission of the copyright owner, and if the music industry was to knock this threat of revenue loss on the head, then it must do something quickly. In December of last year, the Recording Industry Association of America (RIAA) sued Napster for breach of copyright law, seeking $100,000 in damages for each copyright-protected song that has been exchanged illegally using Napster's software. A result in favour of the RIAA would almost certainly put Napster out of business and set a legal precedent. But RIAA is not the only organisation to challenge Napster. Metallica, the once anarchic thrash metal band turned corporate rock group, has also announced its intention to sue the start-up for damages. Metallica has also issued a writ to three US universities claiming they failed to restrict its users from using the service. Furthermore, rap star Dr Dre has also threatened to sue Napster unless it removes all the artist's songs from the service - an unlikely situation as Napster doesn't hold any of the files. Ironically, Dr Dre has himself been involved in a legal wrangle with Lucasfilm for his apparently unauthorised use of the "THX Deep Note", a sound for which Lucasfilm owns the intellectual property rights.

Despite attacks from all sides, Napster believes it has a strong case and has several legal precedents in its favour. It is fighting its corner using the 'Xerox' defence. As Xerox is not responsible for anyone illegally using its photocopiers to duplicate copyrighted material, so Napster should not be liable for people using its software to illegally exchange music files. There was another precedent set in 1998 when CBS tried to sue Amstrad. CBS claimed that Amstrad was breaking copyright law when it released a high-speed tape-to-tape machine that was only capable of recording and not playback. Amstrad won this case and Napster hopes to use this example to its advantage. One additional argument in Napster's favour revolves around a case in 1984 when VHS was in its infancy. The film industry pushed for VHS sales to be blocked because of the threat of piracy. The US Supreme Court refused to do so and now VHS sales count for a significant part of the film industry's revenue.

In general, courts have always tended to leave the responsibility of the copyright holder to enforce compliance with copyright law and avoided clamping down hard on new technologies. Yet, despite Napster's strong case and all the legal precedents it has behind it, the threat to the music industry is perceived to be so large that the outcome of the case is very unclear.

If the RIAA wins the case then it will put the music industry in a very strong position to protect its intellectual property and would make a whole host of other Internet organisations potentially liable for breach of copyright. But the battle would not be won straight away, as a whole host of Napster imitators have cropped up since the success of Napster, many with different ways of getting around existing copyright law.

Scour.net has recently launched software called Scour Exchange that works in a similar way to Napster, while WiredPlanet has launched an application that allows users to share songs via streaming technology. WiredPlanet hopes to avoid the legal pitfalls that Napster has encountered as it does not allow users to download others files but only to listen to them. Unfortunately, this could be undone by the emergence of software that can grab streaming media and save it onto a user's hard disk.

One of the biggest alternative threats to intellectual property, and a much more subversive one, is the introduction of Gnutella. This system was introduced on March 14 by a group of programmers from AOL, and the threat was perceived to be so enormous that its website was torn down within 24 hours of its introduction. Yet, in that time, enough users had got hold of the software that was posted to other websites and newsgroups, and from there it started to spread like wildfire. Gnutella allows computers to connect together in a file-sharing community similar to Napster, but without the need for a central service that could be liable to court action. The networks that run Gnutella can form and disappear without a trace, via pre-arranged movements with instructions being given on newsgroups or the larger Gnutella network. This makes it practically impossible for copyright owners to trace the piracy and clamp down on it.

Gnutella not only allows the transfer of MP3 files but of a whole range of files and software, broadening the piracy threat to a much greater number of industries. Gnutella isn't the only software to do this however, as another recent introduction to this ever expanding file-swapping market is Wrapster. The Wrapster software allows the transfer of a wide range of file types using the Napster service, something that Napster itself cannot do at the moment. The success of Wrapster depends heavily on the outcome of the Napster case, but if the court does rule in favour of the start-up, then the implications of the judgements could be much further reaching than the music industry.

If Napster does come out of this triumphant, the RIAA will have to rethink its strategy towards the Internet somewhat. Some believe that if the case is lost by the RIAA, then it will simply go the US congress in order to get changes in the law, as it has done before. Others believe that it would be better for the music industry to work with Napster and its imitators, and that it was the music industry's fault for not realising the potential of the Internet and MP3 earlier.

The music industry has stuck doggedly to its traditional business model while other industries have jumped at the opportunity that the Internet provides. A recent UK Government report warned that musicians and songwriters were set to lose millions of pounds in revenue through piracy unless it makes it easier to buy music online. It highlighted the fact that music's most devoted fans were teenagers, yet they could not purchase online until they were 18; and that many adults were still wary of passing credit card details over the Internet. If the music industry is to have success in drawing music fans away from the Web, then it needs to look at new ways to market its online activities and make it much easier to purchase music online.

It may seem unlikely that if the RIAA loses this case that it could work with Napster, but it may be of advantage to them. It could be argued that Napster gets music to those who would never before have thought of purchasing that artist's recordings. It is also believed that many music enthusiasts do not want to bite the hand that feeds it, and will continue to purchase music whether there is an easy form of piracy or not. There are certainly marketing opportunities there that could be explored rather than for the industry just to continue fighting a battle it may never win. Piracy exists in all sorts of forms in many areas, but rarely does it do so much damage that it causes companies to go bankrupt. Protecting the rights of an artist's intellectual property is important, but if examples from other markets are put into this context, Napster and its clones should not be held responsible for the piracy that occurs. In this case, it may be of greater advantage to work with or around these services, or at least provide one that can challenges it.

Paul Grant


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This was first published in April 2000

 

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