Digital Copyright

Afterword

(from 2006 edition)

In february 2001, the Court of Appeals for the Ninth Circuit issued its decision in the Napster case.[1] It agreed with the trial judge that Napster’s operation was probably infringing. It dismissed all of Napster’s arguments that individuals could lawfully exchange digital music files over the Internet. The court concluded that Napster had raised defenses that were not frivolous, and the company should be entitled to try to prove them at trial. Because of the extent of the potential damage to copyright owners’ interests, however, the court held that it was appropriate to subject Napster to an injunction requiring it to block copying of particular music recordings identified by plaintiffs while the case remained in the courts.

That trial never took place. Napster’s legal fees ate up all of its capital, and it was forced to declare bankruptcy in June 2002. Copyright owners rebuffed Napster’s attempts to seek licenses to cover file sharing and successfully opposed Napster’s efforts to arrange for its purchase as a going concern. The company was liquidated that autumn. Its most valuable asset was the Napster name, which software company Roxio bought, along with Napster’s domain name, trademark, and patent, for $5,300,000. Roxio then paid $39,500,000 to buy PressPlay, an unsuccessful licensed music download service operated by two of the major record labels, and rebranded it with the Napster name. The name now adorns a licensed online music service that makes audio streams available for a monthly payment of $9.95 and permits subscribers to download copy-protected files containing individual songs for an additional per-song fee. The company proudly advertises that “Napster is the world’s most recognized brand in online music.”

MP3.com settled the original copyright infringement lawsuits by agreeing to pay millions of dollars in licensing fees and then sold itself to Vivendi, one of the companies that had sued it. Scenting an infusion of cash, copyright owners who had not initially sued MP3.com decided to file their own copyright infringement suits. Vivendi ultimately sold MP3.com’s assets to online publisher C|NET, which dismantled the company, discarded its massive database of participating musicians’ music files, and used the MP3.com trademark and domain name as a brand for a Web site featuring music news.

Scour.com, iCraveTV, and RecordTV shut their operations down. MP3Board.com continued to pursue vindication in the copyright infringement litigation, but meanwhile it revamped its site to feature news items about music and intellectual property law. The motion picture industry sued Sonic Blue for marketing ReplayTV, a digital video recorder with commercial-skipping and recording-sharing capabilities. Sonic Blue was the successor to Diamond Multimedia, the company that had marketed the first portable MP3 recorder and successfully defended a recording industry lawsuit to enjoin it. It knew what it would be getting into. It filed for bankruptcy and sold off its assets. The purchaser of its ReplayTV business promptly settled the suit by eliminating the features the motion picture industry objected to.

Reassured by their successes in suing upstart new businesses into bankruptcy, the recording, music publishing, and motion picture industries filed new infringement lawsuits against peer-to-peer software companies Aimster, Grokster, Streamcast, and KaZaA. Aimster declared bankruptcy and ceased operations. In April 2003, however, U.S. courts handed copyright owners their first defeat. District Court Judge Stephen Wilson ruled that Grokster and Streamcast were not liable to the motion picture and recording industries for copyright infringement. Despite the fact that at least some users of Grokster and Streamcast’s Morpheus software engaged in massive copyright infringement, the court concluded, defendants Grokster and Streamcast had no control over that infringement and were not liable for it.[2] Copyright owners appealed the decision and sought to reverse it in Congress. The recording industry, meanwhile, readied its Plan B.

In July, the Recording Industry Association of America (RIAA) announced it would begin gathering information to sue individuals who used peer-to-peer file-sharing software. In September, the recording industry filed lawsuits against 261 individual file sharers. Later in the year, it filed more. As of this writing, the recording industry has sued more than fifteen thousand individuals and has settled into a pattern of filing hundreds of new lawsuits every month. The suits would be expensive to defend, but the recording industry has offered to settle each suit cheaply—so cheaply that it makes little economic sense for a sued file sharer to seek a lawyer’s representation, although not so cheaply that the settlements haven’t generated a small income stream more than sufficient to pay for the RIAA’s legal costs. At least so far, the RIAA has declined to pay any portion of that money to the artists and musicians it is claiming to protect.

The following year, the motion picture industry decided to follow the recording industry’s example and file copyright infringement lawsuits against individual file sharers. The recording and motion picture industries describe the lawsuits as part of their effort to educate consumers about copyright law. As a result, they insist, most Americans now realize that peer-to-peer file sharing is illegal. According to businesses that monitor traffic over peer-to-peer networks for the benefit of entertainment industry clients, who use them in much the same way they use Nielsen ratings, though, that awareness has not yet manifested itself in a reduction in the number of people engaging in peer-to-peer file sharing or in the volume of files they trade.

Meanwhile, the entertainment industries struggle to adapt their business models to an online world. Apple Computer launched the iTunes music store, designed to enable consumers to purchase copy-protected downloads of individual songs to be played on Apple’s iPod MP3 player. Rather than following a subscription model, Apple priced each song at ninety-nine cents. The price point and marketing strategy succeeded: Apple soon led the market in both online music services and portable MP3 players. Its competitors revised their consumer subscriptions services along the lines of the iTunes model, permitting copy-protected downloads for something in the neighborhood of one dollar per song. The difficulty in negotiating licenses with all copyright owners for extant recordings, however, limited online services’ repertoires. Consumers complained about selection and continued to use peer-to-peer for music not available on licensed services. Services seeking to expand their selection beyond their current inventory find themselves stymied by the same unwieldy statutory provisions they used to run MP3.com out of business. The Copyright Office has tried to broker negotiations to revise sections of the copyright statute that govern the licensing of recorded music. Industry representatives on all sides of the bargaining table agree that the current statutory provisions have become completely unworkable. So far, those negotiations have been unsuccessful; there are simply too many disputes over who gets what share of the pie.

On June 28, 2005, the United States Supreme Court decided MGM v. Grokster and gave the motion picture and recording industries much of what they had sought.[3] Grokster and Streamcast, a unanimous Court explained, had intended their software to be used to commit copyright infringement and had actively induced individuals to use it in infringing ways. Under those circumstances, it was appropriate to hold the peer-to-peer software companies liable for their users’ infringement.

Shortly after the Grokster decision, motion picture and recording company lawyers began sending cease and desist letters to businesses distributing peer-to-peer file-sharing software or operating Web sites designed as adjuncts to peer-to-peer networks. A succession of recipients agreed to suspend operations or to seek financing to allow them to reposition themselves as commercial distributors of licensed, copy-protected material. Alternative peer-to-peer software programs sprang up, though, many of them noncommercial efforts written by volunteers. The new software applications allowed individuals to trade music and movie files over the same networks used by Grokster, Morpheus and eDonkey, and over other networks created using different protocols. Overall peer-to-peer file sharing continues unabated.

In November 2005, Grokster threw in the towel. It agreed to pay motion picture and recording studios $50,000,000 it didn’t have, and ceased operations. It replaced its Web site with a page bearing the following message:

Five years after the initial publication of this book, the conflicts it describes have evolved into what representatives on all sides of the controversy describe without intended irony as a “copyright war.”[4] There are hopeful signs. General public awareness of copyright law is much higher. Local newspapers publish copyright stories. Open-source software is making modest headway against its proprietary competitors. The Creative Commons, a copyright reform organization founded by Stanford law professor Larry Lessig, has popularized copyright skepticism by developing alternative licenses for authors. Creative Commons licenses allow authors to permit their works to be distributed with “some rights reserved,” rather than “all rights reserved.”[5] Google and Yahoo have facilitated searches for online material released under Creative Commons licenses. College students have established campus “free culture” groups. The recording industry and motion picture industry suits against individual peer-to-peer file sharers have inspired conversations about what copyright law ought to look like. Many of the participants in these conversations are people who previously paid copyright little attention. Some copyright owners outside of the recording and film industries have begun to voice doubts over whether the scorched-earth tactics may be harming the long-term legitimacy of copyright law, rather than shoring it up.

There are also ominous signs. Copyright owners continue to pursue the digital rights management grail. Record labels have begun to release their recordings in copy-protected formats. The RIAA is seeking legislation that would require digital radio broadcasts to be encrypted to curtail home copying. The motion picture industry is pushing a bill that would empower the FCC to require televisions to implement copy-protection technology. The copy-protection technology already deployed has introduced maddening incompatibilities. Music downloaded from the iTunes music store can be played only on Apple iPods. Consumers who own Rio MP3 players must instead get their music from Rhapsody, Napster, or one of their competitors. Music fans who purchase music files from multiple online services cannot combine their downloads on a single device. Newer copy-protection technology appearing in the market promises to be more intrusive, incorporating monitoring and reporting functions as well as copy controls.

Copyright owners continue to insist that the law does and should give them the right to control the making of every copy, especially every digital copy. For some, that claim seems to have ascended to almost religious significance. When Google announced a project to index the contents of five university libraries, authors and publishers objected. The project involved scanning the text of books in the library in order to create a digital index of the books’ contents. Google promised that it would not put the text of any book online, but would make available a searchable index that would display very short snippets with links to sites from which the books could be purchased. It offered to forgo indexing any book whose copyright owner objected. It declared a moratorium on scanning books to give copyright owners an opportunity to notify Google that they wanted it to exclude their books. It promised to withdraw books from the index if the copyright owner later objected. Authors and publishers filed separate lawsuits seeking to enjoin the project because its scheme, while unlikely to harm any author or copyright owner, violated the principle that the copyright owner controls the making of copies. It is, they insisted, illegal to make even an intermediate index copy of any book without first having secured the permission of the book’s copyright owner. Offering to exclude a book if the owner objects, copyright owners claimed, is not good enough. Rather, the law prohibits copying at all unless the copyright owner has first agreed to license the copy.

The Google lawsuits remind us that networked digital technology constrained by a copyright law that is both spare and sensible can expand our access to knowledge enormously. If, instead, our copyright law takes the form that the entertainment and information industries seem determined to purchase from the United States Congress, access to knowledge and the ability to make use of it may become subject to ever-more draconian controls. In addition, the new regime will nibble away at our liberty until the only way to read, listen to, or view a work in secret is to track down an old analog copy in the bowels of some brick-and-mortar library.[6] We can choose which of these two futures we find more appealing, or we can leave the choice to the lobbyists for copyright-affected industries.

Ann Arbor

November 2005.