A Generation Lost: How the Music Industry Lost 30 Years or So of Income

A research study released today in Great Britain shows that, despite knowing that downloading music is illegal, young people 14-24 continue to download music by whatever technological means available (see original story below). These studies seem to pop up monthly, while the lobbyists and paid-for politicians on either side of the Atlantic try to legislatively put their fingers in the dike. The content industries need to realize that they have complacently fallen so far behind technologically that they simply cannot, and will not, recover their old business model for at least a generation.

For decades, consumers happily rushed to stores to buy the latest releases from their favorite bands. From Elvis to Bill Haley, Buddy Holly to the Rolling Stones to Nirvana to Blink-182, people wanted their tunes and they were willing to pay for them. The portable record player gave way to the car 8-track player. Enter the Walkman, and then the Discman. Then, in the late 1990's some inventive and intelligent folks outside the music industry realized a vast improvement in the solution to the music portability puzzle that had so clearly intrigued people over the previous generations. Along came MPEG Layer 3 technology - you know it as MP3 - and what was a stroll became a sprint en masse.

First players like the Rio took slow steps into market acceptance. Then the Yepp player did the same. More tech savvy citizens got into the mix and along came Napster. The sprint was now a rushing stream. Up went Internet bandwidth, along came Kazaa and the iPod...and then the stream became a torrent - Bit Torrent to be exact. Over the course of less than a decade, the content industries stood by, heads in the sand while technology created by individuals and corporations alike realized all of the ease-of-distribution dreams that the content industries had always dreamed of. Every person in the world could quickly receive a copy of what they had long been willing to pay for. They could take that copy with them anywhere they went - and they wanted to do so. And the content industries stood idly by, deer in headlights, heads in the clouds...the euphemisms go on and on.

Had the industry recognized the changing tide, they would have been able to harness the wave and ride it into an explosion of success and far greater distribution. But instead they turned their backs one year, fought with all their might the next, and shrugged their shoulders the next. What was left? An entire generation who was raised on free, easily distributed, easily duplicated music and movies. Music and movies that these consumers still want.

The content industries will not recover these consumers as paying customers. It simply won't happen. Well, unless they can come up with a technological methodology to put the genie back in the bottle. Suing customers has proven costly and ineffective. Occasional talk of "educational endeavors" to apprise young people of the copyright laws have gone nowhere. And legislation will only breed more cynicism, cost more money, and lead right back to suing or pushing for prosecution of customers.

The only answer is to use all of that money and might to develop new technologies that once again make the industries' products ones that the customer must buy if he or she wants to obtain it. Until then, customers - teens and twenty-somethings - who have grown up with free music and movies at their fingertips will have no reason to change their thinking. Try telling people that we're now going to drive on the left side of the road or that they will have to use coin-operated telephones at home. Simply put, it just doesn't compute. And for a whole generation who got loose from the gates while the industry snoozed, music will always be free and the old way simply won't make sense.

The content industries can regain their paying market. It just isn't going to happen in this generation unless they start being as smart as those who have slayed their previous model and develop another model that proves that paying for the music consumers love is a necessity, not an option.

Link: Original Times Online Story: Young people ignoring attempts to combat illegal music downloading

Busy Week for P2P Law - Damages Awarded in Atlantic v. Howell

There's a term we lawyers use: "spoliation." In normal terms that means destroying (or allowing to be destroyed) evidence that is relevant to pending or foreseeable litigation. In even more blunt terms, it means: the stupidest thing you can do if you're being sued by the RIAA and you're moving in a winning direction.

As I discussed several months ago, a federal court in Arizona had handed a significant setback to the RIAA in their case against Jeffrey Howell for sharing copyrighted music with KaZaA. So how did Howell follow up his small victory? He destroyed evidence that he was expressly instructed to preserve by deleting KaZaA from his computer, removing all shared files, reformatting the drive and using software to wipe the drive. That will quickly turn your fortunes around. Howell was just ordered to pay nearly $41,000 to the RIAA - a damage award that may never have been had he simply followed the court's directive.

More details at Ars Technica.

RIAA's Bad Week

The Recording Industry Association of America hit a couple bumps this past week in its anti-file sharing litigation march. In two separate cases, the RIAA was ordered to pay $103,000 in legal fees to defendant Tanya Andersen and also learned that the judge in the Jammie Thomas case is leaning toward granting a new trial to the woman who has so far been the biggest loser in the RIAA law suits.

In Atlantic v. Andersen (Oregon)the RIAA had filed a John Doe suit based upon the discovery of files shared through a Kazaa user account having Andersen's IP address. Andersen denied any involvement and even produced her computer's hard drive for review. She also denied that her 7-year-old daughter, the only other person in the house, had shared music online. Nearly two years into the litigation, the RIAA voluntarily dismissed its case. Andersen then sought nearly $299,000 in legal fees and approximately $5,000 in costs. In a 33-page opinion, the court thoroughly investigated the number of hours expended and the rates charged, finally concluding that Andersen should be awarded $103,175 in fees and $4,659 in costs. The RIAA will likely object by the May 27 deadline. However, the cautionary tale may have some slowing effect on the RIAA's filing of John Doe suits.

In the infamous RIAA case against Jammie Thomas, the trial judge is considering granting a new trial to Thomas, who was previously found liable for copyright infringement and ordered to pay the RIAA $222,000. The judge has stated that he is leaning toward granting the new trial based on a faulty jury instruction, which told jurors that simply making files available for download constitutes infringement.

For Thomas, this may prove to be only a small victory. The fact is, even though the court has clarified that its jury instruction was wrong and that actual distribution is required, the RIAA may be able to prove actual distribution based solely on the downloading by its investigator, MediaSentry. In the end, Thomas may end up being found liable again. The bigger impact of this 180 by the court is that if the court vacates its earlier judgment, it removes the largest victory the RIAA has on the books to date - a victory that is certainly making people think twice about downloading music online without paying for it.

For more of my thoughts on this decision, see the E-Commerce Times story "RIAA's Legal Steamroller May Grind to a Halt.

"Making Available" Is Not Enough for the RIAA to Show Infringement

I was recently interviewed for a story in EcommerceTimes.com discussing the District of Arizona's decision in Atlantic v. Howell, the latest RIAA file-sharing case to make it to a trial court. While the court's holding in its denial of summary judgment is not Earth-shattering, it does slightly alter the landscape on which the RIAA will work going forward.

The court's holding, requiring actual distribution for a showing of infringement, certainly weighs against the RIAA’s “making available” argument. This is not the first time that the argument has been shot down. The RIAA bases the “making available” argument largely upon a Fourth Circuit case called Hotaling v. Church of Jesus Christ of Latter-Day Saints. They can’t seem to find any other case that clearly says that infringement can occur without actual distribution. That case involved a library making microfiche copies of books and the decision seemed to be largely policy based. Its use by the RIAA has been unsuccessful in other cases and it failed in Perfect 10 v. Amazon where the plaintiff also tried to argue that “making available” constitutes distribution.

In Atlantic v. Howell, the court is essentially saying that the RIAA can absolutely prove that files were available from Howell’s computer via Kazaa. However, because there’s a question as to who made those files available through Kazaa, there’s a genuine issue of fact and summary judgment is inappropriate.

The court also emphasizes that infringement requires a copy to change hands between unauthorized parties. That express statement by the court is the biggest loss for the RIAA here, but it doesn’t stop their cause.

This holding is useful by other people in fighting summary judgment, but it may not save them from an ultimate finding of infringement. The court seemed to disagree with the Electronic Frontier Foundation’s opinion that MediaSentry’s downloading as part of the RIAA’s investigation cannot constitute distribution because MediaSentry is an authorized agent of the RIAA and therefore cannot infringe RIAA members’ own copyrights.

The bottom line is that Howell may make it more difficult for the RIAA to win on summary judgment, but it won’t completely get defendants off the hook. The “making available” argument is moving in the direction of being a confirmed loser. But, by this court’s logic, MediaSentry’s act of downloading may be sufficient to complete the act of distribution by the defendant. If that argument holds up at trial, the RIAA still wins.

Article Published

My most recent article on the PRO-IP Act has been published in the April issue of Intellectual Property Today. It is available online at http://www.iptoday.com/articles/2008-4-panzer.asp

Universities Catching on to Traffic Shaping for Peer to Peer Prevention

Last year I gave a presentation on the potential liability of universities and employers for copyright infringement stemming from peer to peer file sharing by students and employees. In my comments I advocated that universities and employers protect themselves by instituting policies of blocking such network traffic by closing ports known to be used for this type of activity. In the time since, many universities appear to have elected to slow the tide of peer to peer file sharing by using network traffic shaping instead (see, for example: link). While this practice is in the spirit of stopping illegal downloading by students, it is treading on dangerous ground in the face of a largely failing RIAA legal attack against students, which may soon realize it can turn its focus toward the universities' deeper pockets as contributory infringers.

I commented several months ago that I see at least one argument that could be used to show that universities forfeit DMCA safe harbor protection by engaging in traffic shaping. The traffic shaping practices that have become seemingly commonplace over the last several years give the universities undeniable knowledge of the type of activity occurring on their networks. Network administrators in charge of traffic shaping implementation must periodically review the efficacy of their policies and procedures. In doing so, they review the statistics related to the shaped traffic. Because the network using traffic shaping often segments particular activity - such as file sharing - for special handling, the network statistics now present to the administrator, and the university by respondeat superior, clear data regarding the improper activity occurring over its network.

17 USC § 512(a)(2) provides:

(a) Transitory Digital Network Communications.— A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the provider’s transmitting, routing, or providing connections for, material through a system or network controlled or operated by or for the service provider, or by reason of the intermediate and transient storage of that material in the course of such transmitting, routing, or providing connections, if—
***
(2) the transmission, routing, provision of connections, or storage is carried out through an automatic technical process without selection of the material by the service provider

Universities using traffic shaping to slow file sharing without stopping it are now inserting human oversight into their technical processes. Content deemed to be infringing is "selected" for slower transmission. The practice of network traffic shaping may be bringing universities dangerously close to the line of contributory infringement for illegal downloading by students.

Can Ruckus Stop the Commotion? Free Downloads Offered to Students

A new attempt to stem the tide of illegal downloading on college campuses has digital music provider Ruckus offering free downloads of MP3s from a catalog of 2.5 million songs for any student with a ".edu" email account. The downloads are licensed for use on the Ruckus player software, as well as compatible MP3 players. The music may not be burned to CD. (99 cent purchases are available for those who wish to burn CDs.) One university giving the service a try is the University of Georgia.

The program, however, leaves out a few important details regarding its origins. I believe that once uncovered by the student body at large, these omissions may lead to the rapid demise of the service.

I was surprised to find that the Ruckus service is compatible with "many MP3 players," but not the iPod or iPhone products from Apple. According to Ruckus' website, users must have a "PlaysForSure" compatible MP3 player in order to take their music files with them. That led me to ask: What is PlayForSure?

It turns out that PlaysForSure is a standard owned by Microsoft. The PlayForSure logo sports a small Windows icon in the middle, and the PlayForSure website sports a Microsoft copyright logo on the bottom of the page. It would seem, when all this is brought to light, that Ruckus and the free music downloads are an attempt by Microsoft, through creative licensing with the major record labels and negotiation with possibly unsuspecting universities, to wrestle away some of Apple's MP3 player market share, where iPod is king. While universities are likely quick to come on board with this program, seeing it as a legitimate way to stem the tide of illegal downloading on campus, thereby reducing the universities' exposure to secondary liability, I highly doubt that they are fully aware of the program's pedigree.

The article cited above from the University of Georgia raises more legal questions. Please read on in the next post for that discussion.

Online File Sharing Programs: What is BitTorrent?

Much of the discussion of online file sharing that has grown out of the recent pre-litigation letters sent by the RIAA to universities and university students has been throwing out terms relating to file sharing programs and protocols without explaining to readers what these things are and how they work. Let's take a quick look at what BitTorrent, one of the most popular file sharing protocols is and how it works.

BitTorrent is a protocol that was created by a programmer named Bram Cohen in 2001 and 2002. (A protocol is simply a standardized method of communication.) Cohen also created a program to use that protocol - also named BitTorrent. The BitTorrent protocol is relatively simple from a conceptual standpoint:

Users' computers directly connect to one another over the Internet, using the BitTorrent protocol, in order to share files. The various computers achieve this connection by running a program called a BitTorrent client. There are many clients out there made by many different software companies or individuals, but all use the same technology under the hood - the BitTorrent protocol - to communicate.

The BitTorrent protocol allows users to identify multiple other computers that have copies of the files for which they are searching. Once identified, BitTorrent looks at that file as a series of digital chunks called packets. In order to achieve a fast download, the BitTorrent client downloads the various packets of the desired file one at a time, in order or out of order. When the packets arrive, the client re-assembles the packets into the whole. This is possible because: 1) each packet has an identifier that essentially says "I am packet 14 of 255"; and 2) since it's digital, all the 1's and 0's in each packet are still right where they need to be within the whole. Two obvious benefits of this method are that the user can download each packet from the fastest of multiple sources and should any source go offline, the download can continue from the remaining sources.

So far, this isn't much different than file-sharing programs like Kazaa. But here's where BitTorrent gets interesting and attractive to people who do significant sharing. The protocol weights the connections between users in order to reward the users for sharing as well as downloading. Users who download but do not make files available for upload are known as leeches. Those who provide files for upload are seeds. Since seeds are a needed source of content for download, the BitTorrent protocol gives faster downloads and higher priority to users who seed, while leeches do not get this benefit. So...the more you share the faster you can download. Further, since users are downloading in packets, they can begin sharing each packet as they receive it; no need to have the whole in order to share.

The final point: how do the clients know how to find each other? Various websites host "trackers" for torrents. These are lists of the available torrents and by downloading the torrent file related to the desired download, the user's client knows how to announce its desire to the protocol and join the torrent (i.e. the wave of uploading and downloading).

That's pretty much all there is to it. Have questions? Drop me an email.

Audio Available: APLF Presentation on Secondary Liability for P2P File Sharing

The audio recording of my presentation "Secondary Liability of Network Providers for Copyright Infringement through Peer-to-Peer File Sharing" is now available through the website of the Association of Patent Law Firms (APLF). Full event details can be viewed here. The PowerPoint presentation is also available.

• Link: www.aplf.org/events/roundtables/2007-02-22.shtml