signal or noise?

the future of music on the net

BRIEFING BOOK

TABLE OF CONTENTS

Welcome Letter

Agenda

Briefing Materials:

The ABC’s of MP3: A Crash Course in the Digital Music Phenomenon
by Michelle Spaulding Fellow, Berkman Center for Internet & Society

Featured Case:  RIAA v. MP3.com
by Chris Babbitt, HLS ’02

The Great 8 Controversies That Are Shaping the Online Media World
by Alon Neches, HLS ’01

The Economy of Ideas: A framework for Patents and Copyrights in the Digital Age (Everything you know about intellectual property is wrong)
By John Perry Barlow, Cognitive Dissident, EFF Co-Founder, & Fellow, Berkman Center for Internet & Society

Cadence, Code, & Canon: What do Music, Programming, and Law Have in Common Besides MP3?
By Glenn Otis Brown, HLS ‘00

The Word: A Glossary of Terms from Music, Law, and Technology
Compiled by Shoshana Lopatin ‘00 & Talia Milgrom-Elcott ‘02

Position Papers:

The Online Artist is the Empowered Artist An EFF Correspondent Expresses Her Views on Artists and the Net
By Heidi Kriz, Special to EFF's Campaign for Audiovisual Free Expression June 1999

15 MB of Fame:  A Music Industry Insider (and Law School Student) Gives His Perspective on How the Net Will, and Won’t, Improve the Lives of Artists
by Beau Brashares, HLS ‘00

The End of SDMI
By Eric Scheirer, Technology Correspondent, MP3.com, Oct. 15, 1999

The SIGNAL OR NOISE? Briefing Book was compiled and edited by Rebecca Nesson, Meg Smith, Tommy Graham, and Glenn Otis Brown.  Special thanks to Ryan Baker, Abby Brown, Nancy Foti, and John Wilbanks for their help; to Donna Wentworth, Diane Cabell, Jay Bregman, and Jonathan Zittrain for their suggestions; and, of course, a big thank you to all contributing authors.

WELCOME LETTER

When Clash front man Joe Strummer said that rock-and-roll turns rebellion into money, he had the music’s message—not its medium—in mind.  At the time, vinyl, 8-tracks, and cassettes were the norm, and the revolutionary “compact disc” was only on the horizon.  Strummer was simply describing the conscientious pop musician’s familiar Catch-22:  The reward for establishing yourself as counterculture is mainstream acceptance, and the return for successful subversion is often a million-selling record.  Many an outlaw rocker learns the hard way that his anti-Establishment stance is often just what the Establishment is looking to sell.  Just ask Kurt Cobain. 

Yet Strummer’s shrewd observation transcends the pop music context.  Linus Torvalds, father of Linux, the once-obscure operating system now gaining ground on Microsoft’s Windows, echoed the theme in a recent remark: “Eventually the revolutionaries become the established culture, and then what will they do?”  Indeed, the rash of hot Linux IPOs, including December’s record setting debut of VA Linux, a company that sells servers based on Torvalds’ system, shows that technology can also make a mint out of mutiny.

If this insurgent’s paradox seems familiar in the microcosms of both music and digital technology, it might follow that it rings particularly true when those two worlds collide.  Which brings us to MP3—perhaps the most conspicuous and controversial intersection of music and technology of the last few decades.

When MP3 broke onto the scene in the late 1990s, it was as deified by the kids, and as demonized by the powers that be, as rock-and-roll in the 1950s.  MP3-related traffic, both legal and illegal, swamped university servers, as college students ripped, uploaded, downloaded, and swapped MP3 files faster than anyone could track.  From the musician’s perspective, MP3 also seemed to share rock’s do-it-yourself ethos.  Rock-and-roll—particularly at its birth and later with punk rock—showed that you could make music with just three chords and a guitar.  MP3 seemed to promise that you could distribute it with just a few keystrokes and a website.

Meanwhile, the recording industry first reacted to MP3 like a parent to a freshly mohawked teenager:  It was “just a phase,” an irksome but irrelevant fad that would pass with time.  When the trend caught on, though, and it suddenly seemed that all the kids were doing it, alarm bells sounded.  The industry launched a campaign to contain the codec and encouraged music fans to listen responsibly.  The Recording Industry Association of America (RIAA) pushed for criminal and civil crackdowns against pirates and began briefing college students on copyright law through on-campus information sessions.  It also went after the alleged facilitators of piracy for contributory copyright infringement in a series of high-profile lawsuits that continues to this day.

Over time, though, the recording industry’s staunch resistance to digital music gave way to a reluctant embrace—but only on certain conditions.  The industry formed the Secure Digital Music Initiative, or SDMI, to create an encryption standard that would protect against piracy digitally.  But SDMI has yet to come to a consensus, and in the meantime MP3 has become the de facto standard.  New and established MP3-based websites continue to draw millions of hits, and music files now zap from one hard drive to another in quantities only previously approached by pornography.  Indeed, “MP3” dethroned “sex” as the Internet’s most searched-for term in 1999. 

You know you’ve got a phenomenon on your hands when a simple audio technology becomes more popular than sex, more scandalous than drugs, and bigger than rock-and-roll. 

             And with that titillating thought in mind, the Berkman Center for Internet & Society and the Electronic Frontier Foundation welcome you to Harvard Law School for “Signal or Noise?  The Future of Music on the Net.” 

The ABC’s of MP3: A Crash Course in the Digital Music Phenomenon

By Michelle Spaulding
Fellow, Berkman Center for Internet & Society

THE TECHNOLOGY

MP3 stands for “MPEG 1 (Moving Picture Experts Group 1), audio layer 3,” and is a technique designed to compress bulky files of digitized music to facilitate ease of download and storage for bandwidth- and disk space-starved music fans. (While MP3 can be used for any digital audio, such as audiobooks, this paper focuses on the controversies that have arisen to date involving its facilitation of music transmission.)

THE ISSUE

Unlike its precursors, like RealAudio, MP3 compression technology allows a user to download near-CD quality digitized sound recordings quickly and to store them using minimal disk space. This presents the possibility—a threat or opportunity, depending on your point of view—of users being able to compile enormous libraries of pirated songs and store them indefinitely, using only a small fraction of their hard drives. The files can also be easily attached to an email and sent to any number of friends or uploaded to other websites. 

The real threat to the recording industry, as the issue has been cast thus far, is that each successive copy is identical to the original; there is no loss in fidelity no matter the generation of the copy. It was precisely for this reason that the recording industry so vehemently opposed the introduction of DAT technology in the late 1980s, and succeeded in the passage of the Audio Home Recording Act of 1992. Back in the days when the worst damage a wannabe music pirate could do was to dub his Aerosmith cassette and make copies for his friends, the industry did not worry as much about serial copying of copyrighted music. The marginal cost of making copies was constricted by the price of cassette tapes—not expensive, but enough to limit truly mass-scale copying for all but the most dedicated—and each successive copy was of poorer quality than the last. There was little market for a second-, third-, or fourth-generation scratchy home recording.

With the advent of MP3 and related technologies, that has all changed. According to a recent report by Jupiter Communication, the Internet music industry is predicted to hit $1.6 billion by 2002, and somewhere in the vicinity of 500,000 MP3s are out there on the Web. Granted, making and listening to MP3s requires a computer and software, but the requisite software is available for free download from the Internet, along with simple instructions for its use. In addition, electronics hardware manufacturers have been quick to introduce portable MP3 players, which can be used to play the music anywhere, eliminating the need to listen to the music while sitting at one's computer. 

THE INDUSTRY BACKLASH

Largely due to this ease of transmission, the underground movement in pirated MP3s has grown in spectacular fashion. Some speculate that more than 90% of MP3s currently in circulation were obtained without the copyright owner's permission. The industry, most notably through the RIAA, has responded by waging an all-out war on MP3s, constantly monitoring the web for signs of insurgence and sending cease and desist letters to the operators of infringing sites. They are also trying to shut the system down at the source, filing suit against manufacturers of MP3 players, considering action against search engines that help find MP3s, lobbying for favorable legislation, and working feverishly to develop a competing proprietary standard which can be more easily managed.  (See below, “The Future,” for a description of the Secure Digital Music Initiative.)

This war has very much been cast as a battle between the industry on one side and the artists and their fans on the other. (For an insider’s account of this conflict, see below, Beau Brashares, “15 MB of Fame.”) Artists claim that the current system, whereby they receive only pennies on the dollar for CD sales, is archaic, and that the Internet now provides a distribution medium which should allow them to distribute their songs directly to their fans, cutting out the middleman.

Music fans insist that paying $17.99 for a CD which costs only a fraction of that to make is a rip-off, and they cite the low royalties to artists as another reason for their ire. In some convolution of logic akin to a shoplifter's justification of only stealing from big businesses, they seem to be saying that it's OK to take the music because the sellers are making too much money from them. The backup argument when this one fails is that they would pay for the MP3s if only the record companies would make more of them available for purchase. Since they don't, the only way to get their favorite tracks on MP3 is doing what the industry condemns as piracy.

THE EFFECT

Although the RIAA says differently, it's not incredibly easy to get pirated MP3s these days. A threshold problem is one of bandwidth. Using a dial-up connection and a 56K modem, it can take as much as half an hour to download a single song. This can be enough to deter all but the most dedicated would-be pirates from copying more than a song or two. (Of course, as high-speed connections become more prevalent, this hurdle will come down.) Then there's the problem of actually finding an MP3 you desire. As an interactive example, visit an MP3 search engine like <http://oth.net> and enter the name of your favorite band. After wading through the search results to find a page in English, you will likely have trouble connecting to it. (A search site like AudioGalaxy tells you what percentage chance there is of connecting to a given download site).

Many sites are "ratio sites," meaning you must first upload an MP3 song before the site will allow you to download one. Other sites simply provide links to places where particular songs may be downloaded. You'll find now that most of those links lead nowhere—the sites have up and vanished. Chances are that if you click on any of hundreds of site links you will receive a notice from the ISP that the site you are looking for no longer exists. (If, however, the song does begin to download, please click "cancel" immediately or else you are in danger of copyright infringement, and I may be in danger of contributing to your infringement.) Sometimes the URL still points to a page, but the page no longer provides MP3s.

This is by no means to suggest that pirated MP3s cannot be had, and that they aren't being had, but to show some of the limitations of the actual process which must be followed.  One reason for the widespread disappearance of pirate sites is due to the efforts of copyright owners and industry groups who inundate the owners of these sites with cease and desist letters threatening further legal action. The letters alone, and the implied or explicit threats they contain, are generally enough to cause many site operators to close up shop. When cease and desist letters don't work, legal action often can. In the case of A&M Records Inc., et. al. v. the Internet Site Known As Fresh Kutz, (District Court -Southern District of California -Decided- June 9, 1997) Case No.: 97-CV-1099H (JFS), the website operators were unknown and never even showed up to court, but the site came down nonetheless.

This does not mean that these disappearing sites have not reconstituted themselves on other nodes of the web. It is possible, even likely, that the threat of sanction has exacerbated the underground mentality that tends to find ways to route around authority.

THE LAW

So what does the law say? The law of music publishing on the Internet is still in its infancy, and is extremely complex. This section will give an overview of the relevant law, as well as links to commentators' views and interpretations. It is beyond the scope of this effort to provide a comprehensive exposition and interpretation of the law. Rather, the information and links below will provide the knowledge and tools by which you may make an informed interpretation of your own. As with any legal matter, each side states that the law clearly supports its point of view. You decide.

[Note: This section addresses a number of common legal questions that arise regarding the making, distributing, or playing of MP3s based on the relevant U.S. legislation, statutes, and case law.]       

As a threshold matter, the rights of artists, publishers, and record companies (the copyright holders) are constitutionally protected in the U.S. under the provisions of the Copyright Act of 1976, 17 U.S.C. §§ 101 et. seq. (The Act). The Act provides protection for “original works of authorship fixed in any tangible medium of expression, currently known or later developed, from which the work can be perceived, reproduced or otherwise communicated, either directly or indirectly, with the aid of a machine or device.” (17 U.S.C. § 102(a))

WHO OWNS THE COPYRIGHT?

The Act vests ownership of the copyright in the artist or artists (17 U.S.C. § 201(a)), although the artist may freely transfer those rights, in which case the recipient of the transfer may exercise all transferred rights and the artists retains only rights specifically not transferred.  (17 U.S.C. § 201) [Readers familiar with non-U.S. intellectual property laws will note that this differs from the practice in many countries, where certain rights are considered inalienable and remain forever with the creator.] In the case of songs and recordings, artists often transfer their exclusive interest in the copyrights to their creations to music publishers and record companies. [In certain cases, these third parties can be considered the original copyright holder of the creation, if the song as a work made for hire (17 U.S.C. § 201(b)), created "by an employee within the scope of his or her employment" (17 U.S.C. § 101).]

Copyright ownership in musical works is often a multilayered proposition, with several entities negotiating different portions of ownership for differing consideration. This multi-tiered ownership is further complicated by the fact that the various manifestations of a musical work each carry their own bundle of rights and ownership. To get a better sense of who owns what, see the explanatory material accompanying the descriptions of rights below.

WHAT RIGHTS ARE INCLUDED?

The exclusive rights granted to the copyright holder are found in 17 U.S.C. § 106 (pertinent rights in boldface)

Subject to sections 107 through 120, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following:

(1) to reproduce the copyrighted work in copies or phonorecords;

(2) to prepare derivative works based upon the copyrighted work;

(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;

(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;

(5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and

(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.

Note that there is a distinction between "copies" and "phonorecords" in the statutory language. According to the definitions of the Act (17 U.S.C. § 101), "copies" are "material objects, other than phonorecords, in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term ''copies'' includes the material object, other than a phonorecord, in which the work is first fixed." In the world of copyrighted music, this "copy" would refer to the sheet music on which a song is based. It is at this level that we speak of "musical compositions" which are owned by the composer or lyricist who wrote the words.

"Phonorecords'' are "material objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed by any method now known or later developed, and from which the sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term 'phonorecords' includes the material object in which the sounds are first fixed." Phonorecords, therefore, are physical objects, such as tapes, CDs, and albums. The law is interpreted to include digital manifestations of phonorecords, such as a CD compressed into MP3 format and distributed on the Web.  Record companies who fix sound recordings into CDs, tapes, etc. are usually the copyright owners in phonorecords.

Another distinction is that of "sound recordings," which are defined as "works that result from the fixation of a series of musical, spoken, or other sounds, but not including the sounds accompanying a motion picture or other audiovisual work, regardless of the nature of the material objects, such as disks, tapes, or other phonorecords, in which they are embodied." (17 U.S.C. § 101) The copyright holder in a sound recording is the performer whose performance is fixed, or the record company that fixes the sounds in the recording, or both.

These distinctions are important, because they are associated with different rights. For instance, the exclusive rights granted to copyright holders in a sound recording are limited to clauses 1, 2, 3, and 6 of §106, and don't include clause 4's right of public performance. (17 U.S.C. § 114(a)) Even among those rights covered, there are further restrictions. (17 U.S.C. § 114(b))

Confused? You're in good company. This rights structure is perplexing to most people, even the experts. To compound the issue even further are the various organizations which exist to monitor use of musical works and to collect and distribute the royalties to the entities discussed thus far. The music publishers and writers derive a substantial portion of their income from licensing performance rights. There are three mammoth groups that handle the majority of this licensing, the American Society of Composers, Authors, and Publishers (ASCAP), Broadcast Music, Inc. (BMI), and SESAC. (Yes, just SESAC.) For a commission on the royalties, these organizations lobby for favorable legislation, monitor for potential copyright infringement (and send cease and desist letters or file suit against infringers), and enter into licensing agreements on behalf of their members, collecting and remitting royalties. Record companies, publishers, and performers who rely on mechanical royalties (derived from the distribution right in phonorecords), turn to the Harry Fox Agency to perform similar functions. And with the recent grant of digital transmission performance rights to owners of sound recordings (discussed more fully below), the RIAA has begun to handle much of the associated licensing.

Anyone who violates the bundle of exclusive rights associated with the copyright is considered an infringer, and faces injunctive sanctions as well as potential civil or criminal liability. (17 U.S.C. §§ 501 et. seq.) Although the copyright owners have standing to file any suit or complaint, the previously mentioned performers' rights organizations will often do this on their behalf.

It is this complex and carefully refined system which MP3 pirates disregard and disrupt. While it seems clear that the law prohibits copying and distributing copies of musical works without first obtaining the permission of the owner (and making the appropriate licensing arrangements), the technology and terminology that surrounds MP3 use holds great potential for confusing the uninitiated about whether they are in fact in violation of the existing legal rules. Because the law does not provide a seamless web leading to inexorable conclusions, this document can at best set forth the relevant legislation and commentary on which the future resolution, whatever it may be, of the current legal debates will rely. 

THE AUDIO HOME RECORDING ACT OF 1992

In 1992, Congress passed the Audio Home Recording Act (AHRA) (17 U.S.C. §§ 1001-1010). This legislation was enacted at least partly in response to pressure from the recording industry, which was concerned about the introduction of DAT recording devices (the first commercial distribution of a device which allowed for serial copying of music in digital form, i.e. without quality degradation in successive copies). The new law also clarified the status of home audio copying, an issue left unresolved by the Supreme Court's landmark decision in Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984), which proclaimed the legality of home video copying for "time-shifting" purposes (taping a broadcast program to watch at a later time, then erasing the copy so as not to build a "library" of copyrighted works). Under the AHRA, one is not liable for copyright infringement for making, importing, or distributing a "digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium" or for using any of these devices or media to create personal, noncommercial recordings. (17 U.S.C. § 1008)

To compensate copyright holders for the copying that was expected to ensue, the statute provides that manufacturers and distributors of digital audio recording devices and blank digital tapes must pay a percentage-based royalty to the Copyright Office to be pooled and shared among artists, music publishers, and record companies. (17 U.S.C. § 1004) The AHRA also mandates that any digital audio recording device or digital audio interface device must conform to the Serial Copy Management System (SCMS) or some other approved system which prevents copying of copies. (17 U.S.C. § 1002)

THE DIGITAL PERFORMANCE RIGHT IN SOUND RECORDINGS ACT OF 1995

This Act, which amended sections 106 and 114 of the Copyright Act (17 U.S.C. §§ 106(6) and 114), represents the first time public performance rights in sound recordings have been offered protection. Copyright holders in sound recordings now have the exclusive right "to perform the copyrighted work publicly by means of a digital audio transmission." This allows the record companies who hold the rights in sound recordings to collect a royalty on digital "performances" of the sound recording (according to ASCAP, this applies to digital "transmissions," which is interpreted to include downloading, uploading, and streaming).

The Digital Millenium Copyright Act further amended section 114 to "allow a nonexempt, eligible nonsubscription transmission services and a pre-existing satellite digital audio radio service to perform publicly a sound recording by means of certain digital audio transmissions, subject to notice and record keeping requirements." Those notice and record keeping requirements, however, took into account only the industry as it stood in 1995 when the DPRSRA was passed, and provided only that the three eligible services then in existence could file notice within 45 days from the enactment of the notice rule. To rectify this, the Copyright Office promulgated an interim rule amending 37 CFR Part 201 on September 14, 1999 (64 FR 49671). This amendment extends the notice filing period for newly-eligible nonsubscription transmission services in service prior to the passage of the DMCA to October 15, 1999.

Another effect of the DPRSRA on the Internet music industry is that the compulsory license for making and distributing phonorecords (17 U.S.C. § 115) now applies to digital delivery of phonorecords.

What this means for operators of websites who wish to provide their users with MP3 files, either by streaming or downloading, is that they must first obtain a license by paying a fee to the appropriate agency. A performing rights organization such as ASCAP can issue a blanket license which will cover performances of all the music in its collection. Recently, ASCAP signed a groundbreaking deal with MP3.com that did precisely that.  However, the implementation of this Act means, there are now three potential tiers of licensing with which the hapless would-be music distributor would do well to become familiar: the license for performing the work (the same as in the non-Internet world, and handled by an organization like ASCAP, BMI, or SESAC); the license for the digital performance right in the sound recording (often being handled by RIAA now); and the license for the distribution right in the phonorecord (a mechanical royalty like those handled by the Harry Fox Agency). The industry catchphrase these days is "one-stop shopping" and it doesn't exist. One must negotiate separate licenses on all three levels or risk the possibility of suit.

THE NO ELECTRONIC THEFT ACT

The NET, enacted in December 1997, attempted to crack down on computer-based piracy by instituting criminal penalties for copyright infringement by electronic means under 18 U.S.C. § 2319. A trader in illegal MP3s could get up to 6 years in prison (for a second offense—up to 3 years for a first) and/or pay a hefty fine for distributing as little as $1000 worth of music. The law also amended the Copyright Act's definition of "financial gain" (17 U.S.C. § 101) to include "receipt, or expectation of receipt, of anything of value, including the receipt of other copyrighted works." This places under the Act's ambit the MP3 "ratio sites" which require a user to upload a file before being able to download one, as well as trading areas dealing in authorized copies.

THE FEDERAL ANTI-BOOTLEG STATUTE

First introduced in 1994, this statute (18 U.S.C. § 2319A) criminalizes the "unauthorized fixation of and trafficking in sound recordings and music videos of live musical performances"—what music fans have always referred to as "bootlegs," ostensibly after the practice of hiding a tape recorder somewhere on one's person at a concert, to later copy and distribute the tape. The statute was updated in 1997 as part of the No Electronic Theft Act to allow the offended copyright holder to submit a victim's impact statement of economic harm prior to sentencing the convicted infringer. The statute also authorizes U.S. Customs to seize bootlegs at the border like any other contraband, to counteract importation from countries with little or no protection for taping of live performances.

Again, things are not as clear as they may seem from reading the law. Far from prohibiting bootlegging of their performances, there are many bands that actually encourage the practice as a promotional tool, a way of bonding with their fans. Included in this category are popular groups such as the Grateful Dead, Blues Traveler, and the Dave Mathews Band. If, however, you think it's OK to then encode your "authorized" bootleg of one of these bands and distribute it over the Web, think again. The RIAA, in its ever-present watchdog role, has worked hard to shut down bootleg sites as quickly as they arise.

THE DIGITAL MILLENIUM COPYRIGHT ACT

In October 1998, Congress passed the DMCA, an implementing legislation for the WIPO treaties. This is a multi-part piece of legislation addressing many aspects of copyright law.

There is a provision in the Act that makes it illegal to so much as link to infringing material. This has fueled the RIAA's efforts to prevent MP3 search engines such as Lycos from operating. While the Act exempts search engines from liability for linking to pirated material, the exemption applies only to those search engines that do so unknowingly. Since the vast majority of MP3 files are still unauthorized copies, it's unlikely that a court would accept that the linking was done without substantial knowledge. Currently, RIAA and Lycos are discussing the issue.

Other significant points for online music are the Act's strong prohibition against devices which circumvent copyright management technology (which was questioned by some as being unnecessary after the No Electronic Theft Act), and its provisions for liability of ISPs who host infringing material. Critics have said that the language which limits ISP liability only upon compliance (by pulling the user's account after being notified) chills protected speech as well as unprotected speech by fostering a "guilty until they prove themselves innocent" approach to shutting down sites.

The control measures have also been criticized for interfering with legitimate exemptions from infringement, discussed next.

EXCEPTIONS TO EXCLUSIVE RIGHTS

FAIR USE

All of the foregoing details much about the rights of the various parties involved in a music copyright on the Internet. However, in keeping with the purpose of copyright law, which is to secure a limited monopoly as an incentive to create, there are a few exceptions to the rights granted to copyright holders, one of the most important of which is the fair use exception. (17 U.S.C. § 107) This section provides for a limited amount of copying for the purposes of "criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research." There is no bright line rule which can allow one to determine if an anticipated use is fair, but courts use section 107's balancing test which looks at four factors:

1. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

2. the nature of the copyrighted work;

3. the amount and substantiality of the portion used in relationto the copyrighted work as a whole; and

4. the effect of the use upon the potential market for or value of the copyrighted work.

Legislation, like the DMCA, dealing with online copyright issues has been extensively criticized as trampling upon this crucial exception. It has traditionally been a fair use of a copyrighted work to reverse engineer a computer program for purposes of interoperability, but no longer is under the DMCA if the computer program contains any security measures intended to prevent such procedures. Also, the fair use doctrine is the rock upon which much of the education community is built. Legislation like the DMCA, which makes “hacking” lock-up technologies illegal even if the use to which the locked-up material would be put is legal provides no safe havens within which researchers may work without running afoul of the law. While language was added to allow limited copying of programs in order to make interoperability technically possible, the Act still prohibits the manufacture of the type of equipment necessary to perform this function. Critics point out that prohibiting hardware which has substantial non-infringing uses undermines the Supreme Court's reasoning in Sony v. Universal Studios because it effectively prohibits permitted actions. It remains to be seen how this will play out in the courts. Stanford's Fair Use site, <http://fairuse.stanford.edu>, provides extensive information on this and other issues related to this doctrine.

FIRST-SALE DOCTRINE

Another significant exception which may prove important in the case of downloaded music is the First-Sale Doctrine (17 U.S.C. § 109), which allows a person who has legally obtained a copy of a phonorecord to sell or dispose of it without authorization from the copyright holder. Currently, if you buy a CD from the store, you are free to give it to a friend or sell it to a used CD store. You paid for it, you may dispose of it as you wish. However, the restrictions of the DMCA, and the protections being built into MP3 copyright protection mechanisms, will make such a transfer both illegal and impossible. Like the fair use implications, it remains to be seen how this will end up. In the meantime it is the subject of heated debate and merits attention.

THE FUTURE

It is likely that MP3 is going to be around for a while. At least, that is, until something bigger, better, or just different comes along and captures our attention. Meanwhile, several organizations are working to make sure that they provide that something different—in the form of an audio compression format which incorporates copyright management characteristics. The best known of these bodies is the Secure Digital Music Initiative, a group of more than 200 of the industry's heaviest hitters sharing a common goal—to stop MP3 piracy. The group, which began in December 1998 and has been the subject of much controversy in its short life, recently announced that it has developed specifications for a new download format which members believe will strike a balance between their interest in protection with the fans' interest in high-quality, low-cost music.

Until some new standard is in place, copyright owners will continue to use existing technology like watermarking to track unauthorized uses of their material.

This approach, however, remains subject to the vagaries of the law. As we have seen throughout this work, that law is complex and confusing. MP3 as a viable commercial medium is not likely to flourish until both the technology and the law are addressed and brought into harmony with one another. Lobbying efforts would be well directed at this point at clarifying the existing law, rather than trying to create new ones. If copyright owners are truly interested in ensuring compliance, they should do their best to make sure that full information is easily accessible to all, in a language that the average young person wanting to get an MP3 can understand.

For additional materials regarding MP3 legal issues, see MP3 , Prof. William T. Fisher, Intellectual Property in Cyberspace.

Featured Case: RIAA v. MP3.com

By Chris Babbitt, HLS ’02

In the increasingly acrimonious battle between the recording industry and MP3.com, the Recording Industry Association of America (RIAA) filed suit against the online music provider in a New York federal district court this past January, alleging massive copyright infringement stemming from the company’s new service, My.MP3.com.  The new service allows subscribers to create a personal online jukebox from the company’s database of 45,000 CDs, the copyrights to which are owned by the member companies of RIAA (including Sony, Universal, BMG, Warner, EMI, and other major labels).  If the suit is successful, damages could run as high as $6.75 billion.

At the center of the dispute are the two key features of My.MP3.com, Instant Listening and Beam-It.  The former gives consumers instant access to CDs purchased through any of MP3.com’s online retail partners.  Once the customer’s credit card is cleared and the purchase complete, that CD’s songs are digitally transferred into the customer’s private account on My.MP3.com, allowing the customer to listen to the new CD before the physical version arrives in the mail.  Beam-It allows similar access to any already-owned CD; the customer need only insert a CD into the CD-ROM drive and ‘beam’ it to MP3.com.  The site reads the CD’s WAV files and places a ready-made digital copy into the customer’s online collection.  The service does not require proof of ownership, only access to the CD—whether original or copied (though the terms of the service agreement do require the customer to attest that the CDs are her own).  Once the files are in the individual’s personalized online collection, a user can access them on demand without ever again needing the physical CD.

Since there is no mechanism through which the consumer can upload or copy her own CDs onto My.MP3.com, the digital music files transferred into individual accounts come from copies in the company’s massive database, not from customer-owned recordings.  This tension between ownership of form and reproduction of content is certain to be the heart of the litigation.  The Copyright Act of 1971 prohibits the copying of a recording by anyone but the holder of the copyright, and although an exception created by the Audio Home Recording Act of 1992 allows consumers to copy music for personal use, that exception is specifically limited to individual consumers. 

Legal analysts disagree on likely defense strategies for MP3.com.  Andrew Bridges, the attorney who successfully defended Diamond Multimedia against a similar suit by RIAA in 1999, suggests that MP3.com portray its case in terms of online consumers’ rights to innovative technologies.  In a comment to The Industry Standard, Bridges explained, “The question is, is it fair for consumers to find ways of listening to music that they have already paid for, in a different format, without having to pay for it again?”[1]  An alternative defense strategy relies on the doctrine of fair use, a narrow exception to copyright laws, which allows for the unauthorized reproduction of copyrighted material under certain circumstances.  Whether those circumstances are present here is unclear.  Nevertheless, MP3.com CEO Michael Robertson hinted at a blend of the two defenses: “[T]o whom does the music belong?  When a consumer buys a CD, does the industry get to tell the consumer where she can listen to her music?  The type of technology that she can use to play the CD?  What about the fair use rights of the consumer…?  Is it all about forcing consumers to use out-dated technologies to induce yet another CD sale?”[2]

Whether MP3.com stands a chance is another question.  “I don’t know what MP3.com was thinking,” comments Entertainment Law Reporter editor Lon Sobel. “I couldn’t imagine how they thought that what it was doing was legal.”[3]  Bob Cohn, chairman of Emusic.com, was equally pessimistic about MP3.com’s chances: “It’s a textbook case of mass copyright infringement.  You can’t do this, it’s silly.”[4]  Ironically, one of the most charitable assessments of MP3.com’s new service came from someone in the recording industry.  Jeremy Silver, VP of new media for EMI Music, referred to the personal online library as a “genius idea…It fulfills our aspirations that we’ve had for a long time.”  However, Silver also noted that in the absence of permission from the copyright owners, My.MP3.com involved “clear copyright infringements.”[5]

The battle between RIAA and MP3.com is not limited to the courts.  In an open letter to MP3.com CEO Michael Robertson, RIAA CEO Hilary Rosen wrote, “[Y]our company’s violation of the copyright law is brazen on its face.  Simply put, it is not legal to compile a vast database of our member’s sound recordings with no permission and no license.  And whatever the individual’s right to use their own music, you cannot exploit that for your company’s commercial gain.”[6]  But that may be just the point.  In response, Robertson wrote, “Our service is nothing more than a virtual CD player.  It is a new and innovative technology that lets people listen to their music.  We have every intention of fighting your efforts to dictate the way people can use their music. . . .  Only the person who buys the CD is entitled to listen to that music through our service.  That’s it.  Your argument is that technology companies cannot facilitate that use.  Why?  Because you apparently believe that you have the right to control the content even after the user buys it.  We disagree.”[7]

Perhaps out of tenacity or desperation, MP3.com has filed its own suit against RIAA in a California Superior Court, seeking unspecified damages for what it alleges amount to unfair business practices, defamation, trade libel, and interference with prospective economic advantage.  The complaint alleges that Rosen, RIAA, and 20 unnamed “co-conspirators” made disparaging statements to MP3.com’s financial partners, investment bankers, and advertising clients, as well as to managers, agents, and artists in the music industry, warning them that MP3.com commits “theft and exploitation” and advising them, “[d]on’t get ripped off.”[8]  More seriously, the complaint alleges that Rosen, RIAA, and the unnamed co-conspirators “used their influence and the implied threat of adverse commercial consequences to persuade or induce these individuals and businesses to discontinue or not to engage in business relationships with MP3.com.”[9]  A trial date has not been set.

With all the major labels poised to enter the online music market this year, both suits will have a significant impact on the future relationship between the music industry and services such as My.MP3.com.  A finding of copyright infringement would likely spell the end for the online company.  Its eight million registered users might just have to turn back to the major labels themselves, change their musical tastes, or else take matters into their own hands.  In any event, both suits are sure to be closely watched by consumers’ rights advocates and copyright advocates alike.  For more information and continuing coverage, visit www.MP3.com or www.RIAA.com. 

The Great 8 Controversies That Are Shaping the Online Media World

by Alon Neches, HLS ’01

The explosion in online music has sent shockwaves throughout the music and film industries.  Online music sales, including both sales of conventional media and digital downloads, are projected to hit $2.6 billion by 2003, or 14 percent of the U.S. market.[10] 

However, only $147 million of this is expected to come from downloaded music.[11]  Piracy has made a tremendous body of music available for free over the Internet.  The recording industry estimates that pirated music in the form of counterfeit CD's and downloaded music already costs it $4.5 billion in lost revenue every year.  The corresponding figure for lost revenue due to piracy by the motion picture industry stands at $3 billion per year.[12]     

These dizzying figures have already made important impacts in the media industries  In business, many industry insiders saw the Time-Warner/AOL merger as largely driven by Time-Warner's realization that it needed an online distribution channel and method for its media content to compete in the Information Age.[13]  The legal cases and controversies below also promise to play an important role in shaping the music industry of the 21^st century.

Recording Industry Association of America v. Diamond Multimedia Systems, 180 F.3d 1072 (9^th Cir. 1999)

Originally filed in October 1998, the Diamond Multimedia case was the first major case surrounding online music filed by the Recording Industry Association of America (RIAA).  The RIAA claimed that Diamond's Rio MP3 player violated the Audio Home Recording Act (AHRA), 17 U.S.C.A. §100,1 because it was a "digital audio recording device" which did not have any system for preventing copying of copies, and thus of protecting the copyrights of the music that it reproduced.  Both the District Court and the Ninth Circuit Court of Appeals ruled that the Rio MP3 player did not fall under the AHRA because it recorded music from a computer hard drive, which unlike an audio compact disc typically contained more than just sounds.[14]

Instead of appealing to the Supreme Court, the parties reached an amicable settlement in August 1999.  Although terms of the settlement were not disclosed, both parties stipulated an earnest desire to turn digital distribution of music into a viable business.[15]

The Diamond Multimedia dispute is notable just as much for its resolution as for any copyright issues it presented.  Both parties represent business interests looking to use the Internet as a viable distribution channel from which to garner revenue.  Also, both realized that cooperation in working toward a technology that could help protect copyrights online was much more profitable than pursuing adversarial litigation against one another.

RIAA v. Napster

In December 1999, the RIAA sued Napster, a fledgling company that distributes software that allows an ever-growing community of music enthusiasts to search for and download music from one another's computers.  Napster claims that because it does not host any content nor tracks any of the exchanges made by Napster music community members, it does not violate any copyright laws.  Napster also asserts that its software was developed as a tool for up and coming artists to find listeners and vice-versa.[16]

The RIAA contends that Napster's software is a "burglar's tool" that allows Net users to download songs by top-selling artists freely, thus making copies without paying legally mandated royalties and costing the recording industry tremendous revenue losses.[17]  The RIAA's case faces some important legal hurdles.  First, the Digital Millennium Copyright Act (DMCA) creates a safe harbor for online sites and services that desist from copyright-infringing acts upon notice.  Furthermore, the Telecommunications Act of 1996 protects Internet Service Providers from liability for any legal improprieties committed by third parties over the ISP's network under certain circumstances.[18]

The Napster case raises the important question of liability for companies that only provide software or services that enable online music exchange but do not themselves actually reproduce or distribute any of the music.  Also, Napster's software allows for identification of the ISP numbers of its members, which could create the potential for prosecution of the individuals that use Napster's software.

Real Audio Controversy

In October 1999, an independent security analyst discovered that RealNetworks had assigned each of the users who registered its popular Real Jukebox software a global unique identification number (GUID) and was using that number to track music listening patterns. Although RealNetworks claimed that the data was only used for aggregation purposes, GUID technology potentially enabled RealNetworks to create personal profiles for identified individuals that included everything from listening preferences to credit card numbers.[19]  This type of data collection was in direct contradiction to RealNetworks’ stated privacy policy.

The same day The New York Times reported this story, RealNetworks released a patch for its software that allowed RealJukebox users to block transmission of their personal information, and amended its privacy statement to give its software users a more detailed description of what data might be collected about them.  These corrective actions did not stop two separate class-action suits from being filed against RealNetworks.  The first, a $500 million suit filed in California Superior Court, claimed RealNetworks violated California's unfair business practices law.  A second, federal class action suit, filed in the Eastern District of Pennsylvania, claims that RealNetworks violated the federal Computer Fraud and Abuse Act and state privacy and consumer protection laws.[20]

This controversy underscores the importance of privacy issues on the Internet.  Privacy concerns arising out of such situations have prompted the Federal Trade Commission to examine online profiling.  In a study underwritten by the FTC and DoubleClick, a majority of respondents stated a preference for targeted advertising and personalized Net service, but over 92% of those surveyed stated that privacy on the Internet was a concern for them, and 67% of respondents were "very concerned" about potential abuses arising from the use of their personal information.[21] 

University of Oregon Student Convicted Under the No Electronic Theft (NET) Act

In November 1999, University of Oregon student Jeffrey Levy pled guilty to violating the NET Act, thus becoming the first person to fall within its scope.  Levy drew the attention of university administrators when his website began sending out 1.7 Gigabytes of information over the course of several hours.  After University administrators contacted the FBI, Levy's computer was searched.

According to the prosecuting attorney, Levy had illegally posted approximately $70,000 worth of copyrighted material on his site, including 1,000 MP3 files.[22]   The NET makes it illegal to reproduce or distribute copyrighted materials worth more than $1,000.[23]  For Levy, the maximum penalty could have been three years in prison and a $250,000 fine.  Due to his cooperation, he received two years of probation and a limit on his Internet access.

Levy's case signifies a new commitment by law enforcement authorities to use the tools at their disposal to uphold copyright and intellectual property laws.  Beyond the NET, proposals for new sentencing guidelines may make the sanctions for violating copyright laws more severe.  Furthermore, the Department of Justice, the Customs Service, and other agencies have recently announced an intellectual property rights initiative that is aimed specifically at entertainment software pirates.[24]

Seventy-One Students at Carnegie Mellon University Reprimanded for MP3 Use

In October 1999, administrators at Carnegie Mellon University randomly searched 250 student files and punished 71 students for illegally sharing MP3 files across the school's intranet.  Although some the files searched were password protected, all of the students had made their passwords available in public files.[25]  The students were stripped of their Internet access and were required to attend a 90-minute lecture on copyright laws and infringement. 

This case highlights the potential liability of universities for the actions of their students.  According the DMCA, universities are protected from prosecution for copyright infringement only if they take action when notified of potential copyright violations.  Universities that fail to do so may face entity level liability.[26]

Artists In Support of Online Music Distribution

For the many artists who have regular conflicts with their recording studios over sharing profits, online music distribution offers an appealing option.  Artists such as the Beastie Boys, David Bowie, and Chuck D have all publicly stated their intention to use the Internet as a distribution channel for their music.  Last May, Chuck D's group Public Enemy released its new album, There's a Poison Goin' On, online through the website Atomic Pop.  Visitors can purchase the CD online or download the music digitally.  Bowie and Chuck D have both released singles online. 

These artists view music distribution over the Internet as a way to capture a larger proportion of the profits from their music.[27]  As stated by Chuck D, "It used to be all about the triple R -- radio, retail, record companies. The Internet means you don't need them nearly as much. I'm going to use it not just for myself, but to help out some newer artists who are doing their thing."[28]

At the moment, most industry insiders see MP3 technology as most useful for independent record labels looking for cost effective methods of distributing their distributing their music.  Piracy issues currently preclude large recording companies from embracing online distribution. 

Motion Picture Association of America's DVD Case

In January, Norwegian police arrested and charged 16-year-old Jon Johansen with copyright infringement and gaining unauthorized access to data and software.  Johansen had posted a program called DeCSS that breaks the encryption on DVDs and allows them to be copied and converted into other types of operating systems.[29]  With the proliferation of DeCSS, the Motion Picture Association of America filed a lawsuit in New York against various individuals who it considered instrumental in DeCSS's rampant spread throughout the Internet.  On January 20, U.S. District Judge Lewis Kaplan granted a preliminary injunction and ordered the hackers to take down its DeCSS posting or potentially face sanctions under the DMCA.[30]

Proponents of the code claim that the purpose of DeCSS is to allow the playback of DVDs on operating systems not supported by the Motion Picture Association of America, which will in turn lead to better and cheaper DVD players due to increased competition in their production.[31]  The main alternative operating system that these programmers seek to introduce into the DVD fold is Linux.  To date, DVDs are not manufactured with the capability of being played on Linux machines.

Although video and DVD pirating may seem to make little impact in highly developed markets such as the United States, the consequences can be very real in developing markets.  For example, a recent study by the Film and Video Industry Association of Malaysia shows that 80 cinema screens at 58 locations have ceased operations in the past two years, partially due to the prevalence of pirating.[32]  At the same time, in the United States, DVD hacking is probably not occurring nearly on the scale of music piracy.  The average DVD is 5 gigabytes in size—a prohibitively large file to download no matter the speed of your Internet connection.  Furthermore, blank DVDs usually cost more than DVD movies.[33]

ICraveTV

ICraveTV is a Toronto-based company that broadcasts live programs from 17 U.S. and Canadian television stations, including affiliates of the four major United States networks.  Thirteen movie and broadcasting companies, along with both the National Football League and the National Basketball Association, have filed suits to stop ICrave from broadcasting their copyrighted material.[34]

For its part, ICrave claims that its free web broadcasts are intended only for Canadian Internet users and that their broadcasts are legal in Canada.  However, movie and broadcasting executives claim that ICrave’s security measures are inadequate to ensure that non-Canadians are excluded from the site.  On February 8, 2000, U.S. District Judge Donald Ziegler issued a preliminary injunction against ICraveTV because its security measures did not bock access for U.S. viewers.          

The movie and broadcast industry sees this case as a benchmark for protecting intellectual property on the Internet.  Movies and broadcast programming derive their revenues from advertisers.  If the same content was freely available on the Internet, these industries could lose both advertisers and the viewers those advertisers seek to reach.[35]

The Economy of Ideas: A Framework for Patents and Copyrights in the Digital Age.
(Everything you know about intellectual property is wrong.)

By John Perry Barlow
Cognitive Dissident, EFF Co-Founder, and Fellow, Berkman Center for Internet & Society

If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of everyone, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density at any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property.

                                                                                —Thomas Jefferson

Throughout the time I've been groping around Cyberspace, there has remained unsolved an immense conundrum that seems to be at the root of nearly every legal, ethical, governmental, and social vexation to be found in the Virtual World. I refer to the problem of digitized property.

The riddle is this: if our property can be infinitely reproduced and instantaneously distributed all over the planet without cost, without our knowledge, without its even leaving our possession, how can we protect it? How are we going to get paid for the work we do with our minds? And, if we can't get paid, what will assure the continued creation and distribution of such work?

Since we don't have a solution to what is a profoundly new kind of challenge, and are apparently unable to delay the galloping digitization of everything not obstinately physical, we are sailing into the future on a sinking ship.

This vessel, the accumulated canon of copyright and patent law, was developed to convey forms and methods of expression entirely different from the vaporous cargo it is now being asked to carry. It is leaking as much from within as without. 

Legal efforts to keep the old boat floating are taking three forms: a frenzy of deck chair rearrangement, stern warnings to the passengers that if she goes down, they will face harsh criminal penalties, and serene, glassy-eyed denial.

Intellectual property law cannot be patched, retrofitted, or expanded to contain the gasses of digitized expression any more than real estate law might be revised to cover the allocation of broadcasting spectrum. (Which, in fact, rather resembles what is being attempted here.) We will need to develop an entirely new set of methods as befits this entirely new set of circumstances.

Most of the people who actually create soft property—the programmers, hackers, and Net surfers--already know this. Unfortunately, neither the companies they work for nor the lawyers these companies hire have enough direct experience with immaterial goods to understand why they are so problematic. They are proceeding as though the old laws can somehow be made to work, either by grotesque expansion or by force. They are wrong.

The source of this conundrum is as simple as its solution is complex. Digital technology is detaching information from the physical plane, where property law of all sorts has always found definition.

Throughout the history of copyrights and patents, the proprietary assertions of thinkers have been focused not on their ideas but on the expression of those ideas. The ideas themselves, as well as facts about the phenomena of the world, were considered to be the collective property of humanity. One could claim franchise, in the case of copyright, on the precise turn of phrase used to convey a particular idea or the order in which facts were presented.

The point at which this franchise was imposed was that moment when the "word became flesh" by departing the mind of its originator and entering some physical object, whether book or widget. The subsequent arrival of other commercial media besides books didn't alter the legal importance of this moment. Law protected expression and, with few (and recent) exceptions, to express was to make physical.

Protecting physical expression had the force of convenience on its side. Copyright worked well because, Gutenberg notwithstanding, it was hard to make a book.  Furthermore, books froze their contents into a condition that was as challenging to alter as it was to reproduce. Counterfeiting or distributing counterfeit volumes were obvious and visible activities, easy enough to catch somebody in the act of doing. Finally, unlike unbounded words or images, books had material surfaces to which one could attach copyright notices, publisher's marques, and price tags.

Mental to physical conversion was even more central to patent. A patent, until recently, was either a description of the form into which materials were to be rendered in the service of some purpose or a description of the process by which rendition occurred. In either case, the conceptual heart of patent was the material result. If no purposeful object could be rendered due to some material limitation, the patent was rejected. Neither a Klein bottle nor a shovel made of silk could be patented. It had to be a thing and the thing had to work.

Thus the rights of invention and authorship adhered to activities in the physical world. One didn't get paid for ideas but for the ability to deliver them into reality. For all practical purposes, the value was in the conveyance and not the thought conveyed.

In other words, the bottle was protected, not the wine.

Now, as information enters Cyberspace, the native home of Mind, these bottles are vanishing. With the advent of digitization, it is now possible to replace all previous information storage forms with one meta-bottle: complex—and highly liquid—patterns of ones and zeros.

Even the physical/digital bottles to which we've become accustomed, floppy disks, CD-ROM's, and other discrete, shrink-wrappable bit-packages, will disappear as all computers jack in to the global Net. While the Internet may never include every single CPU on the planet, it is more than doubling every year and can be expected to become the principal medium of information conveyance if, eventually, the only one.

Once that has happened, all the goods of the Information Age—all of expressions once contained in books or film strips or records or newsletters—will exist either as pure thought or something very much like thought: voltage conditions darting around the Net at the speed of light, in conditions which one might behold in effect, as glowing pixels or transmitted sounds, but never touch or claim to "own" in the old sense of the word.

Some might argue that information will still require some physical manifestation, such as its magnetic existence on the titanic hard disks of distant servers, but these are bottles that have no macroscopically discrete or personally meaningful form.

Some will also argue that we have been dealing with unbottled expression since the advent of radio, and they would be right. But for most of the history of broadcast, there was no convenient way to capture soft goods from the electromagnetic ether and reproduce them in anything like the quality available in commercial packages. Only recently has this changed and little has been done legally or technically to address the change.

Generally, the issue of consumer payment for broadcast products was irrelevant. The consumers themselves were the product. Broadcast media were supported either by selling the attention of their audience to advertisers, using government to assess payment through taxes, or the whining mendicancy of annual donor drives.

All of broadcast support models are flawed. Support either by advertisers or government has almost invariably tainted the purity of the goods delivered.  Besides, direct marketing is gradually killing the advertiser support model anyway.

Broadcast media gave us another payment method for a virtual product in the royalties which broadcasters pay songwriters through such organizations as ASCAP and BMI. But, as a member of ASCAP, I can assure you this is not a model that we should emulate. The monitoring methods are wildly approximate. There is no parallel system of accounting in the revenue stream. It doesn't really work. Honest.

In any case, without our old methods of physically defining the expression of ideas, and in the absence of successful new models for non-physical transaction, we simply don't know how to assure reliable payment for mental works. To make matters worse, this comes at a time when the human mind is replacing sunlight and mineral deposits as the principal source of new wealth.

Furthermore, the increasing difficulty of enforcing existing copyright and patent laws is already placing in peril the ultimate source of intellectual property, the free exchange of ideas.

That is, when the primary articles of commerce in a society look so much like speech as to be indistinguishable from it, and when the traditional methods of protecting their ownership have become ineffectual, attempting to fix the problem with broader and more vigorous enforcement will inevitably threaten freedom of speech.

The greatest constraint on your future liberties may come not from government but from corporate legal departments laboring to protect by force what can no longer be protected by practical efficiency or general social consent.

Furthermore, when Jefferson and his fellow creatures of The Enlightenment designed the system that became American copyright law, their primary objective was assuring the widespread distribution of thought, not profit. Profit was the fuel that would carry ideas into the libraries and minds of their new republic. Libraries would purchase books, thus rewarding the authors for their work in assembling ideas, which otherwise "incapable of confinement" would then become freely available to the public. But what is the role of libraries if there are no books? How does society now pay for the distribution of ideas if not by charging for the ideas themselves?

Additionally complicating the matter is the fact that along with the physical bottles in which intellectual property protection has resided, digital technology is also erasing the legal jurisdictions of the physical world, and replacing them with the unbounded and perhaps permanently lawless seas of Cyberspace.

In Cyberspace, there are not only no national or local boundaries to contain the scene of a crime and determine the method of its prosecution, there are no clear cultural agreements on what a crime might be. Unresolved and basic differences between European and Asian cultural assumptions about intellectual property can only be exacerbated in a region where many transactions are taking place in both hemispheres and yet, somehow, in neither.

Even in the most local of digital conditions, jurisdiction and responsibility are hard to assess. A group of music publishers filed suit against Compuserve this fall for it having allowed its users to upload musical compositions into areas where other users might get them. But since Compuserve cannot practically exercise much control over the flood of bits that pass between its subscribers, it probably shouldn't be held responsible for unlawfully "publishing" these works.    

Notions of property, value, ownership, and the nature of wealth itself are changing more fundamentally than at any time since the Sumerians first poked cuneiform into wet clay and called it stored grain. Only a very few people are aware of the enormity of this shift and fewer of them are lawyers or public officials.

Those who do see these changes must prepare responses for the legal and social confusion that will erupt as efforts to protect new forms of property with old methods become more obviously futile, and, as a consequence, more adamant.

FROM SWORDS TO WRITS TO BITS

Humanity now seems bent on creating a world economy primarily based on goods that take no material form. In doing so, we may be eliminating any predictable connection between creators and a fair reward for the utility or pleasure others may find in their works.

Without that connection, and without a fundamental change in consciousness to accommodate its loss, we are building our future on furor, litigation, and institutionalized evasion of payment except in response to raw force. We may return to the Bad Old Days of property.

Throughout the darker parts of human history, the possession and distribution of property was a largely military matter. "Ownership" was assured those with the nastiest tools, whether fists or armies, and the most resolute will to use them. Property was the divine right of thugs.

By the turn of the First Millennium A.D., the emergence of merchant classes and landed gentry forced the development of ethical understandings for the resolution of property disputes. In the late Middle Ages, enlightened rulers like England's Henry II began to codify this unwritten "common law" into recorded canons. These laws were local, but this didn't matter much as they were primarily directed at real estate, a form of property that is local by definition. And which, as the name implied, was very real.

This continued to be the case as long as the origin of wealth was agricultural, but with dawning of the Industrial Revolution, humanity began to focus as much on means as ends. Tools acquired a new social value and, thanks to their own development, it became possible to duplicate and distribute them in quantity.

To encourage their invention, copyright and patent law were developed in most western countries. These laws were devoted to the delicate task of getting mental creations into the world where they could be used—and enter the minds of others—while assuring their inventors compensation for the value of their use. And, as previously stated, the systems of both law and practice that grew up around that task were based on physical expression.

Since it is now possible to convey ideas from one mind to another without ever making them physical, we are now claiming to own ideas themselves and not merely their expression. And since it is likewise now possible to create useful tools that never take physical form. we have taken to patenting abstractions, sequences of virtual events, and mathematical formulae--the most un-real estate imaginable.

In certain areas, this leaves rights of ownership in such an ambiguous condition that once again property adheres to those who can muster the largest armies. The only difference is that this time the armies consist of lawyers.

Threatening their opponents with the endless Purgatory of litigation, over which some might prefer death itself, they assert claim to any thought that might have entered another cranium within the collective body of the corporations they serve. They act as though these ideas appeared in splendid detachment from all previous human thought. And they pretend that thinking about a product is somehow as good as manufacturing, distributing, and selling it.

What was previously considered a common human resource, distributed among the minds and libraries of the world, as well as the phenomena of nature herself, is now being fenced and deeded. It is as though a new class of enterprise had arisen which claimed to own air and water.

What is to be done? While there is a certain grim fun to be had in it, dancing on the grave of copyright and patent will solve little, especially when so few are willing to admit that the occupant of this grave is even deceased and are trying to up by force what can no longer be upheld by popular consent.

The legalists, desperate over their slipping grip, are vigorously trying to extend it. Indeed, the United States and other proponents of GATT are making adherence to our moribund systems of intellectual property protection a condition of membership in the marketplace of nations. For example, China will be denied Most Favored nation trading status unless they agree to uphold a set of culturally alien principles that are no longer even sensibly applicable in their country of origin.

In a more perfect world, we'd be wise to declare a moratorium on litigation, legislation, and international treaties in this area until we had a clearer sense of the terms and conditions of enterprise in Cyberspace. Ideally, laws ratify already developed social consensus. They are less the Social Contract itself than a series of memoranda expressing a collective intent that has emerged out of many millions of human interactions.

Humans have not inhabited Cyberspace long enough or in sufficient diversity to have developed a Social Contract that conforms to the strange new conditions of that world. Laws developed prior to consensus usually serve the already established few who can get them passed and not society as a whole.

To the extent that either law or established social practice exists in this area, they are already in dangerous disagreement. The laws regarding unlicensed reproduction of commercial software are clear and stern . . . and rarely observed. Software piracy laws are so practically unenforceable and breaking them has become so socially acceptable that only a thin minority appears compelled, either by fear or conscience, to obey them.

I sometimes give speeches on this subject, and I always ask how many people in the audience can honestly claim to have no unauthorized software on their hard disks. I've never seen more than ten percent of the hands go up.

Whenever there is such profound divergence between the law and social practice, it is not society that adapts. And, against the swift tide of custom, the Software Publishers' current practice of hanging a few visible scapegoats is so obviously capricious as to only further diminish respect for the law.

Part of the widespread popular disregard for commercial software copyrights stems from a legislative failure to understand the conditions into which it was inserted. To assume that systems of law based in the physical world will serve in an environment that is as fundamentally different as Cyberspace is a folly for which everyone doing business in the future will pay.

As I will discuss in the next segment, unbounded intellectual property is very different from physical property and can no longer be protected as though these differences did not exist. For example, if we continue to assume that value is based on scarcity, as it is with regard to physical objects, we will create laws that are precisely contrary to the nature of information, which may, in many cases, increase in value with distribution.

The large, legally risk-averse institutions most likely to play by the old rules will suffer for their compliance. The more lawyers, guns, and money they invest in either protecting their rights or subverting those of their opponents, the more commercial competition will resemble the Kwakiutl Potlatch Ceremony, in which adversaries competed by destroying their own possessions. Their ability to produce new technology will simply grind to a halt as every move they make drives them deeper into a tar pit of courtroom warfare.

Faith in law will not be an effective strategy for high tech companies. Law adapts by continuous increments and at a pace second only to geology in its stateliness.  Technology advances in the lunging jerks, like the punctuation of biological evolution grotesquely accelerated. Real world conditions will continue to change at a blinding pace, and the law will get further behind, more profoundly confused. This mismatch is permanent.

Promising economies based on purely digital products will either be born in a state of paralysis, as appears to be the case with multimedia, or continue in a brave and willful refusal by their owners to play the ownership game at all.

In the United States one can already see a parallel economy developing, mostly among small fast moving enterprises who protect their ideas by getting into the marketplace quicker then their larger competitors who base their protection on fear and litigation.

Perhaps those who are part of the problem will simply quarantine themselves in court while those who are part of the solution will create a new society based, at first, on piracy and freebooting. It may be that when the current system of intellectual property law has collapsed, as seems inevitable, that no new legal structure will arise in its place.

But something will happen. After all, people do business. When a currency becomes meaningless, business is done in barter. When societies develop outside the law, they develop their own unwritten codes, practices, and ethical systems. While technology may undo law, technology offers methods for restoring creative rights.

A TAXONOMY OF INFORMATION

It seems to me that the most productive thing to do now is to look hard into the true nature of what we're trying to protect. How much do we really know about informaiton and its natural behaviors?

What are the essential characteristics of unbounded creations? How does it differ from previous forms of property? How many of our assumptions about it have actually been about its containers rather than their mysterious contents? What are its different species and how does each of them lend itself to control? What technologies will be useful in creating new bottles to replace the old physical ones?

Of course, information is, by its nature, intangible and hard to define. Like other such deep phenomena as light or matter, it is a natural host to paradox.  And as it is most helpful to understand light as being both a particle and a wave, an understanding of information may emerge in the abstract congruence of its several different properties that might be described by the following three statements:

     • Information is an activity.

     • Information is a life form.

     • Information is a relationship.

In the following section, I will examine each of these.

I. INFORMATION IS AN ACTIVITY

Information Is a Verb, Not a Noun.

Freed of its containers, information is obviously not a thing.  In fact, it is something that happens in the field of interaction between minds or objects or other pieces of information.

Gregory Bateson, expanding on the information theory of Claude Shannon, said, "Information is a difference which makes a difference." Thus, information only really exists in the delta.  The making of that difference is an activity within a relationship. Information is an action that occupies time rather than a state of being which occupies physical space, as is the case with hard goods. It is the pitch, not the baseball, the dance, not the dancer.

Information Is Experienced, Not Possessed.

Even when it has been encapsulated in some static form like a book or a hard disk, information is still something that happens to you as you mentally decompress it from its storage code. But, whether it's running at gigabits per second or words per minute, the actual decoding is a process that must be performed by and upon a mind, a process that must take place in time.

There was a cartoon in the Bulletin of Atomic Scientists a few years ago which illustrated this point beautifully. In the drawing, a holdup man trains his gun on the sort of bespectacled fellow you'd figure might have a lot of information stored in his head. "Quick," orders the bandit, "Give me all your ideas."

Information Has To Move.

Sharks are said to die of suffocation if they stop swimming, and the same is nearly true of information. Information that isn't moving ceases to exist as anything but potential...at least until it is allowed to move again. For this reason, the practice of information hoarding, common in bureaucracies, is an especially wrong-headed artifact of physically based value systems.

Information is Conveyed by Propagation, Not Distribution.

The way in which information spreads is also very different from the distribution of physical goods. It moves more like something from nature than from a factory. It can concatenate like falling dominos or grow in the usual fractal lattice, like frost spreading on a window, but it cannot be shipped around like widgets, except to the extent that it can be contained in them. It doesn't simply move on. It leaves a trail of itself everywhere it's been.

The central economic distinction between information and physical property is the ability of information to be transferred without leaving the possession of the original owner. If I sell you my horse, I can't ride him after that. If I sell you what I know, we both know it.

II. INFORMATION IS A LIFE FORM

Information wants to be free.

Stewart Brand is generally credited with this elegant statement of the obvious, recognizing both the natural desire of secrets to be told and the fact that they might be capable of possessing something like a "desire" in the first place.

English Biologist and Philosopher Richard Dawkins proposed the idea of "memes," self-replicating, patterns of information that propagate themselves across the ecologies of mind, saying they were like life forms.

I believe they are life forms in every respect but a basis in the carbon atom. They self-reproduce, they interact with their surroundings and adapt to them, they mutate, they persist. Like any other life form they evolve to fill the possibility spaces of their local environments, which are, in this case the surrounding belief systems and cultures of their hosts, namely, us.

Indeed, the sociobiologists like Dawkins make a plausible case that carbon-based life forms are information as well, that, as the chicken is an egg's way of making another egg, the entire biological spectacle is just the DNA molecule's means of copying out more information strings exactly like itself.

Information Replicates into the Cracks of Possibility.

Like DNA helices, ideas are relentless expansionists, always seeking new opportunities for lebensraum. And, as in carbon-based nature, the more robust organisms are extremely adept at finding new places to live. Thus, just as the common housefly has insinuated itself into practically every ecosystem on the planet, so has the meme of "life after death" found a niche in most minds, or psycho-ecologies.

The more universally resonant an idea or image or song, the more minds it will enter and remain within. Trying to stop the spread of a really robust piece of information is about as easy as keeping killer bees South of the Border. The stuff just leaks.

Information Wants To Change.

If ideas and other interactive patterns of information are indeed life forms, they can be expected to evolve constantly into forms that will be more perfectly adapted to their surroundings. And, as we see, they are doing this all the time.

But for a long time, our static media, whether carvings in stone, ink on paper, or dye on celluloid, have strongly resisted the evolutionary impulse, exalting as a consequence the author's ability to determine the finished product. But, as in an oral tradition, digitized information has no "final cut."

Digital information, unconstrained by packaging, is a continuing process more like the metamorphosing tales of prehistory than anything that will fit in shrink wrap. From the Neolithic to Gutenberg, information was passed on, mouth to ear, changing with every re-telling (or re-singing). The stories that once shaped our sense of the world didn't have authoritative versions. They adapted to each culture in which they found themselves being told.

Because there was never a moment when the story was frozen in print, the so-called "moral" right of storytellers to keep the tale their own was neither protected nor recognized. The story simply passed through each of them on its way to the next, where it would assume a different form. As we return to continuous information, we can expect the importance of authorship to diminish. Creative people may have to renew their acquaintance with humility.

But our system of copyright makes no accommodation whatever for expressions that don't at some point become "fixed" nor for cultural expressions