Ron Hoyt

Cyber Ed Summer 2000

Napster vs. The RIAA

With the advent of MP3 (compressed high quality audio internet files), and the debut of the Rio MP3 player, the music industry became worried that downloading and copying of music files from the internet would lead to wide spread piracy and lost revenues.

Until recently, their fears were mostly unfounded. Searching the Internet for MP3 files was a difficult and time consuming task that was best left to die-hard music fans that had the time to sift through broken links and partake in endless scavenger hunts on ftp sites.

Then in late 1999 a small start up called Napster Inc gave music fans a chance to browse collections of MP3 music and chat online. The feature that caused traffic to the site to overwhelm the company’s servers, however, is Napsters ability to let chatters trade their MP3 files with each other.

Hailed as a breakthrough by music fans and assailed by the record companies as piracy, Napster is locked in a legal battle with the Recording Industry Association of America, a trade organization whose members include all the major record companies such as Sony Music, BMG, EMI, Universal, and Warner Music Group. The RIAA contends that Napster is violating federal copyright laws by allowing easy trading of copyright protected music. Napster denies it is doing anything illegal, and at the same time champions itself as a leader in a music revolution. Finally unsigned bands around the world have an easy way to distribute their songs to a previously untapped audience.

Does Napster simply facilitate the distribution of free music; from unknown bands looking for a record contract all the way to Greatfull Dead bootlegs (sanctioned by the band itself)? Or as the RIAA sees it are they guilty of contributing to copyright infringement? Even current national music artists are split on the issue. The hard rock band Metallica is an outspoken opponent of Napster, while the band Limp Bizcit is on a summer tour sponsored entirely by Napster, with free admission for all fans.

The RIAA has filed a multi-million dollar lawsuit against Napster and would like nothing more than to put them out of business. The band Metallica and rapper Dr. Dre have filed their own copyright infringement suits. The future of MP3 and music downloading on the Internet could hang in the balance of these lawsuits.

The issue that Napster will surely use in its defense is that people who use the Napster service trade files with each other. Essentially Napster is the search engine that enables you to locate and download files from another Napster users computer. Thus there are no copyrighted music files on any Napster computer.

The recently passed Digital Millennium Copyright Act of 1998 allows search engines to link to MP3 files. However if notified that a link points to copyrighted music, the search company must remove the link.

“Anyone that contributes to the infringement of a copyright can be prosecuted,” said Bob Kohn chairman and founder of Internet music label Emusic.com Inc. “Someone that has a search engine that links to a copyrighted MP3 file can be accused of contributory copyright infringement”

John Fanning, former CEO of Napster said, “There is no copyrighted music that crosses the Napster Network.” “We are about building music communities not stealing.”

Such semantics has not softened the RIAA’s stand on Napster, and a hearing for the case is set for July 26,2000 in the United States District Court in San Francisco. Napster has hired attorney David Boies who worked for the government in the highly publicized Microsoft trial.

So much attention has been focused on this issue lately that this past Tuesday July 11, the United States Senate held a fact-finding session on the issue of digital downloading and copyright law. Though there is no pending legislation on the subject, the findings of this hearing could cause the Senate to reexamine the Digital Millennium Copyright Act of 1998. The hearing, titled “Music on the Internet: Is there an up side to downloading”? was chaired by country songwriter and Republican Senator Orrin G. Hatch of Utah. Many of the top players from both the internet and record industries testified before the committee including, Metallicas Lars Ulrich, Hank Barry CEO of Napster, Michael Robertson CEO of MP3.Com, Gene Hoffman, Jr. CEO of Emusic, Gene Kan developer of Gnutella (another MP3 trading program) and a few others.

Each of these testimonies is a compelling argument for their case. From the artists to the old-school industry presidents, to the adolescent code developers, these file sharing arguments are well thought and researched.

The following are excerpts from their testimony, click on the links to read each persons full statement.

Senator Orrin G. Hatch, Committee Chairman

"Our copyright laws must play a role - a strong role - in protecting creative works over the

Internet... We must protect the rights of the creator. But we cannot, in the name of copyright,

unduly burden consumers and the promising technology the Internet presents to all of us."

Read his full testimony

Lars Ulrich, Metallica

"Make no mistake, Metallica is not anti-technology. When we made our first album, the majority

of sales were in the vinyl record format. By the late 1980's, cassette sales accounted for over 50%

of the market. Now, the compact disc dominates. If the next format is a form of digital

downloading from the Internet with distribution and manufacturing savings passed on to the

American consumer, then, of course, we will embrace that format too."

Read his full testimony

Roger McGuinn, The Byrds

"In 1998 an employee of MP3.com heard the folk recordings that I'd made available at

http://www.mcguinn.com and invited me to place them on MP3.com. They offered an unheard of,

non-exclusive recording contract with a royalty rate of 50% of the gross sales. I was delighted by

this youthful and uncommonly fair approach to the recording industry."

Read his full testimony

Hank Barry, CEO, Napster

"The ability to listen to music digitally depends on the ability to copy audio files into a computer,

compress them into the MP3 format and transfer them over the Internet. Napster does none of

these things. So why all the fuss about Napster?"

Read his full testimony

Fred Ehrlich, President, New Technology, Sony Music Entertainment

"The price you pay for your CD flows back through the chain to compensate each and every one

of the contributors involved in the production of that sound recording. It is primarily the

responsibility of the record label to effectuate that flow of monies. As you might imagine, it is

extraordinarily costly for a record label to acquire talent, record, promote, market, manufacture,

and sell recorded music."

Read his full testimony

Michael Robertson, Chairman and CEO, MP3.com

What is at issue are consumers' rights. The rights of consumers to listen to, manage, and share

their music - music they already own. Because of current legal and regulatory roadblocks, as well

as existing and outdated copyright provisions, consumers are caught in a quagmire of bureaucratic

regulations and prevented from enjoying music in ways never before imagined."

Read his full testimony

Gene Hoffman, Founder, CEO and President, Emusic.com

"Nobody responds well to threats… but like traffic laws and patrol cars, their existence is actually

a very good thing. In fact, I believe that a perceived risk associated with illicitly trading music will

end up benefiting not only artists and record companies, but also digital music fans themselves."

Read his full testimony

Gene Kan, Computer Software Developer, Gnutella

"Artists and recording companies alike can benefit from digital music... For artists, it is a chance to

reach directly to their audience: a global audience. They have the opportunity to capture nearly

100% of the gross sales of their product. For recording companies, there is an opportunity to

reduce the marginal cost of distribution to nearly zero, and to expand the scope of distribution to

the entire Internet."

Read his full testimony

Jim Griffin, Founder and CEO, Cherry Lane Digital

"Technology's deepest impact will be from enabling the digital delivery of art, such as music,

movies, books, and other intellectual property. The effects will go deeper than just changing the

way we listen to popular music. Currently, we kill art regularly due to our need to balance the

costs of distribution with its rewards. Once delivery is digitized, art need never die, and new art

can come to life that might not otherwise find an audience."

Read his full testimony

The Napster vs. RIAA case will eventually be a test of interpretation of the Digital Millennium Copyright Act, as well as the Audio Home Recording Act of 1992. Napsters defense that one-to-one swapping of files for personal use is not illegal under the Home Recording Act. They go on to claim that record sales are not harmed, and in fact have actually increased while Napster has been in business.

Some artists contend that good or bad, they just don’t want their work copied and they should retain the right to control their own work.

Steve Fabrizio, a lawyer for the RIAA said “All the copying and distributing being done by Napster is on general purpose computers.” “Napster turns each of its users into public servers, making the files available world wide—that’s not personal use that’s world wide publishing”.

The U.S. District Court will begin hearings on July 26, 2000.