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F & F


Should we beat the new kid up?
posted by mpawlo on Tuesday January 21, @05:18PM
from the the-future-of-music dept.
Copyright As reported by Greplaw's Miguel Danielson, Verizon has lost its battle to protect its customers from having their personal information divulged to the RIAA and other intellectual property owners under the DMCA.

Greplaw's editors, although we are reporting indepently of each other, often tend to criticise the RIAA's efforts to stop online music trading. Even though many would find it is easy to grasp some of the fair use arguments, one may still wonder what a proper action for RIAA et al might be. I will try to investigate the issue in this article.

Please note that other Greplaw contributors might have a different take on the subject.

Should we beat the new kid up?

By: Mikael Pawlo

The Internet is a new kid on the music industry’s block. From the right holders’ perspective the digital domain is often presented as a problem and not an opportunity. In this column, I have identified five possible ways for the music industry to treat this new kid on the block. There may be more options than the ones I present and it should also be noted that the options could be combined in several ways.

1. Do nothing

This is hardly a feasible way from the music industry’s perspective. Even though the Internet is a new kid on the block and we know little of its threats and benefits to the music industry, the music industry is well-established and its distribution and marketing channels extensively developed. It could be argued that the latter is an argument for doing nothing from the legislator point of view, while such well-developed markets with few sellers, many buyers and significant barriers to enter, tend to tilt towards an oligopoly. Hence, consumers may suffer under a regime where a few big players on the market may push prices upward due to the limited competition and the cartel-like market structure. Internet would introduce a new element forcing the large firms to cut prices and act more efficiently, all to the benefit for the consumer. However, from the industry perspective, it is already hard enough to keep profits at its current level and the industry suffers even without the black market competition, thus the industry will act proactively to ensure that the new kid do not mess up the current regime.

2. Levies

The introduction of levies, that is fees, on recordable media is a way of ensuring that composers and authors get compensated for any copying.

One major argument against levies is that the redistribution is very hard. Since all kind of works – ranging from music, art and books to software – could be recorded on digital media, they should all be included in the levy scheme. How should you determine which author should be compensated for what use? This problem could probably be solved by the collecting societies, dealing with similar issues for radio- and restaurant uses. If we move out of the musical arena, it is plausible that the efforts of authors of free software and other software manufacturers would not be rewarded through levies. The levies on recordable media that would be collected from media containing free software would therefore not be redistributed to the authors.

However, there is another argument against levies, that I find more important. Levies would also include fees on fair use copying and fees on copying of works that are protected by using other licensing schemes – like free software. Through levies fair use copying would be conducted at a fee, thus skewing the balance between the copyright monopoly and the rights of the individual and giving the copyright proprietor a financial benefit he should not have.

3. Prohibition

The lobbying and legal efforts of the music industry have focused much on prohibition. The individuals ways of using music are limited through introducing protection for anti-circumvention devices in both Europe (through the European Copyright Directive) and in the U.S. (through the Digital Millennium Copyright Act) and by narrowing the fair-use provisions down to a minimum. The "rip, mix, burn – after all it’s your music" mantra played in endless Apple commercials may soon be a memory. If anti-circumvention technology is used on the optical medium carrying the music you may not even make MP3s of your own CD:s, since you can not play the disc in your computer and may not tamper with the protection to exercise your fair use rights.

The new distribution technology is also under fire. Napster was more or less sued out of business. Grokster and Kazaa risk facing a similar fate, through the music industry’s aggressive legal action.

Hence, the music industry is doing its best to preserve things the way they were before the introduction of the new kid.

4. Compulsory licenses

One way of dealing with peer-to-peer networks like used-to-be-Napster and Kazaa is to grant them license schemes with copyright proprietors. Should the proprietors not be able to decline such licenses, Kazaa could start a legit network of distribution of music, charging users through micro-payments, subscriptions or through displaying advertisments – or all of the above. Such licenses face the same problems as levies, but could – in contrast to levies – be limited to certain works. Kazaa could have a special license for its distribution of music and another license for its distribution of movies.

As put by professor Lawrence Lessig in The Future of Ideas, the fees for compulsory licensing should not be set by an industry intent on "killing this new mode of distribution. They should be set (---) by a policy maker keen on striking a balance." Lessig also provide the comparison to cable TV, whereas cable providers got access to television broadcasts, but broadcasters and copyright holders had a right to compensation for that access.

Compulsory licenses might kill an entire line of intermediaries, but the legislator should take no such consideration. Old distribution methods always face the risk of extinction when new technology is introduced. The music industry might in part embrace such changes and in part reject them. The big firms would most probably oppose such changes, since they may disrupt currents ways of business and pose a potential threat to revenues.

5. Adopt new business methods

In a recent The Globe and Mail column, business strategy consultant David Ticoll put it the best: "What I want for Christmas is music on demand." Christmas has passed, but who will fulfil Ticoll’s wish for next Christmas?

The music industry has so far devoted its talent towards banning the new technology. Very little has been done to embrace the Internet and make use of its benefits. Real One, powered by Musicnet, is one effort at introducing music industry-driven legal distribution of music. Warner Brothers, BMG, EMI, Arista and Virgin all joined the initiative, which made more than 75.000 songs available for download on the release. However, the use of the songs was strictly regulated through a digital rights management scheme demanding online validation of songs on every play plus the need to repurchase songs every other month in order to keep them on the hard-drive. When the music industry’s alternative is worse than Kazaa and also cost money, why should the user then submit to the worse technology?

In conclusion, RIAA and its European equivalents are wrong in trying to ban the Internet distribution. The Internet may pose both possibilities and threats and the music industry should not just focus on the bad things. Kazaa and its likes are equally wrong in profiting from the efforts of other in a blantantly piggy-backing way. Personally I find a combination of compulsory licenses and new business methods the most feasible way for the music industry, balancing the need for copyright proprietors to be rewarded for their work, fair use for the users and need to propagate new technology and innovation. It is time to reframe the debate and try to find constructive solutions that all parties benefit from, including the users. Time will tell if this is a naive assumption or not. The Internet is a new kid on the music industry’s block. Let’s try to make friends with him instead of beating him up.

Mikael Pawlo

Mikael Pawlo is an associate of the Swedish law firm Advokatfirman Lindahl. On nights and weekends he works as an editor for the leading Swedish open source and free software publication Gnuheter. He is also contributing editor of the Harvard Berkman Center publication on Internet law issues, Greplaw.org.

Judge: Verizon Must Identify Kazaa User | Rosen Leaves RIAA  >


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    Should we beat the new kid up? | Login/Create an Account | Top | 2 comments | Search Discussion
    The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
    If they can't adapt they should 'die' (Score:0)
    by Anonymous Coward on Wednesday January 22, @04:59PM (#584)
    If they can't adapt they should 'die'. Like the telegraph and train(in the USA) industries. Like the innumerable industries, companies, and people that have been disrupted by new technologies. What is happening (at least in the USA) and should never happen is the passing of laws to prop up companies past their time. Done more out of fear of trashing the economy or "loosing jobs" than actual bribes/lobbying. But that helps.
    [ Parent ]
    Once there was a way... (Score:1)
    by Audacious on Wednesday January 22, @09:05PM (#585)
    User #541 Info
    1. Do nothing

    Doing nothing will not make a company, organization, or anyone else cut back on how much they will charge for something. For instance, the Coca-Cola company (up until a year ago or so) has said that Coke still sells for pennies a glass. Yet theatres still sell large drinks for $4.00 or more. Even though there are hundreds of theatres across the country - none of them will willingly reduce the cost of a drink. The music industry is no different. We will (hopefully) see a drop in CD prices soon - but that is only because the government took them to court over price fixing []. Doing nothing is not the answer.

    2. Levies

    We already have levies. We have to pay a tax every time a TV, radio, or any other item which can play a VHS tape, CD, DVD, or whatnot is bought. We have to pay a tax on blank media. We have to pay a tax when we watch TV, listen to the radio or whatever (these taxes are indirect. The stations pay it and charge their customers who pass it along to the consumer.) In effect, like the Americans who founded our country said "We are taxed when we buy the tea in England, when the tea is loaded onto the boats bound for America, when they arrive in our own ports, when we unload the tea, and when we sell the tea." It is unjust and evil to allow yet another levy to be placed upon an already overburdened populace.

    3. Prohibition

    This will never work. As a computer programmer who has been around since the 1970's I can tell you that no matter what kind of fancy circumvention stuff is put onto anything - it only slows down the hackers. It doesn't stop them. Think back to when the software industry was fighting with the hackers. The only people who suffered were the innocents. Those people who may want a back-up copy of their software just in case the original went bad couldn't because the software companies were so busy fighting with hackers that they forgot entirely about their customers. The backlash was that the government stepped in and halted the entire thing by saying they were never going to buy copyprotected software ever again. So this approach will never work. The reason is simple: Everything has to start somewhere.

    What I mean is that in order for anything to work you have to have some way to read that first bit of information from whereever you store it. From there on out you load in each segment of whatever code it is you have come up with to do your security. So that first step gets you every time. Because then the hackers know how to start following your program. Even if it is hard coded into a chip and put onto every motherboard ever made - it makes no difference. You just change the call to that chip so it calls your software, you always return a "It's ok to do this" message, and away you go. No more security. Very easy to do. I've seen several people do it through the years. It will not work. Oh - it will work for those innocent people who won't understand why their computer now acts against them. But it won't help with anyone who has the least bit of knowledge on how to break these things. And you can make bet that those people will give out how to get around this stuff as fast as it is changed. Don't believe it? Go Google [google.com] for how to hack into your DVD player to make it play your DVDs any way you want.

    4. Compulsory Licenses

    This is the best way to do this but the levies have to be small. No one wants to pay $5.00 to be able to play an entire CD when they only want to listen to one or two songs from the CD. Secondly, like books, no one wants to have to pay repeatedly just to listen to the same song. In other words - people don't want to license the song - they want to own it. The music industry would do well to provide middle of the road quality music for sale on-line

    Read the rest of this comment...

    [ Parent ]

    Humanity has the stars in its future, and that future is too important to be lost under the burden of juvenile folly and ignorant superstition. - Isaac Asimov

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