Vol. 19, No. 1 September 11, 2000

Copycats and Copyrights by Bill Dickneider

apster, schmapster, what’s activity made possible by recent Metallica’s drummer Lars Ulrich all the fuss? Two years advances in technology. One of put the complaint this way: Nago the company didn’t those advances is a file compres- “From a business standpoint, this exist. Now, the news is filled with sion format called MP3, which is about piracy — taking some- stories of Napster’s courtroom greatly shrinks the size of music thing that doesn’t belong to you; battles. Its legal opponents files. Another is the rapid growth and that is morally and legally include the Recording Industry of storage capacity on personal wrong. The trading of such Association of America (RIAA), computers. Still another break- information — whether it’s rock band Metallica, the National through has been the growing music, videos, photos, or what- Music Publishers Association, availability of wide Internet ever — is, in effect, trafficking in and rapper Dr. Dre. “pipelines” called broadband. stolen goods.” 2 These high-speed connections Born To Swap are common at universities, such Rights and Wrongs he dispute traces back to as the one Shawn Fanning he “goods” that the RIAA Tsoftware that nineteen-year- attended. Tand Metallica claim are old Shawn Fanning wrote while Napster was very popular, so in being stolen are not physical an undergraduate at Northeast- May 1999 Shawn founded a products but so-called intellectual ern University. He created the company with the same name.1 property rights. A property right software to swap music files with Downloaded at no charge, is the exclusive authority to his friends on the Internet, an Napster enables people to swap determine something’s use. You MP3 music files stored on their own the property rights to your Purchases of Music CDs individual computers. Someone shoes, bicycle or car, for instance, by Buyers Ages 10 - 19 so you control their use. $3.4 can buy a CD, “rip” the music, Billions of dollars and store the MP3 file on a Various property rights come $3.2 computer. Other music fans can wrapped in every CD, and these $2.8 then use Napster and the Internet rights become yours when you to find and download the file buy a CD. For example, you $2.4 from that computer. No payment have the property right to the to a music store; no payment to a physical disk. You control its use $2.0 record company; no payment to and can even use it to play '90 '91 '92 '93'94 '95 '96 '97 '98 '99 an artist! Suddenly, music was Frisbee with your dog if you Figures are not available for the year 2000, when the free — or so it seemed. wish. You also have the right to popularity of Napster and peer-to-peer file swapping soared. listen to the music whenever you Source: Recording Industry Association of America In response, the RIAA and others (http://www.riaa.com) filed suit against Napster. want. You can even transfer that right to someone else by giving the CD away or the ability to copy movies. The movie industry sued trading it. But you don’t really own the music the company, arguing that people would violate itself, so you can’t legally make multiple copies copyright laws by copying movies. The court said that of the music and sell or give them to other the video recorder had substantial legal uses besides people. The property right to the music on the copying movies, so it ruled that Sony wasn’t breaking CD belongs to the record company or artist. copyright laws. Similarly, Napster argues that it has substantial legal uses, such as promoting music from The legal protection of intel- groups that haven’t signed with a music company. lectual property begins with our nation’s Constitution. Late in July, a federal judge issued an order that Article I, Section 8 states that would essentially have shut down the company Congress has the power “to before the end of the month. Napster promote the progress of immediately appealed the decision, and science and useful arts, by the appellate court postponed the order securing for limited times to In to review the case. t erne t authors and inventors the Do you think the Internet is about to blow away Meanwhile, the Internet is here to stay, exclusive right to their music CDs? and music fans want to get music from it. respective writings and Indeed, other methods of peer-to-peer file swapping discoveries.” This passage is the foundation for are eagerly snapping at Napster’s heels. Gnutella, U.S. laws relating to patents, copyrights, trade- Freenet, Napigator, iMesh, Scour, and CuteMX are marks, and trade secrets. These intellectual examples. Who could have known how boldly and property rights give inventors, artists, and innova- swiftly the Internet would challenge music compa- tors temporary monopolies to the fruits of their nies? In what seemed like a nanosecond, the Internet creativity. Without the legal protection, competi- slashed the cost of distributing an additional copy of tors could copy new products, inventions, or a song all the way to zero. With the disappearance of other creations and thus eliminate the monetary these costs, peer-to-peer file swapping mushroomed – incentive that encourages people to create them and people began to think that music was free. in the first place. In Napster’s case, the intellec- tual property rights in question are copyrights – the Still, there are hefty costs for creating and promoting exclusive rights to reproduce, sell, or distribute a song long before it is distributed to the public. For particular songs and music. example, no one knows which song or group will turn out to be a hit. Music companies must Interpreting the Law search for the winners and subsidize apster argues that it is doing nothing illegal. the losers. They also must pay N“Napster is an Internet directory service,” promotion costs when introducing To Think About said its CEO Hank Barry. “Napster does not copy new songs and new groups. Artists ✔ Could a company like files. It does not provide the technology for must also bear costs and take risks when they invest time and money Napster earn money? copying files. Napster does not compress files. It Explain. does not transfer files. Napster simply facilitates in creating songs. ✔ 3 Do you think music communication.” Copyright law allows people All these costs and risks are silent as can be free? Explain. to reproduce copyrighted materials for noncom- one listens to a hit song or group. ✔ What stocks would mercial uses, such as photocopying a page from a They gain a voice only when music you buy or sell short if the book. Napster claims that its users are merely fans pay for the music they want. appellate court rules in making electronic copies of music for noncom- But suppose they don’t pay. Would Napster’s favor? mercial use, so their behavior isn’t illegal. And if music producers and artists be users are doing nothing illegal, neither is Napster. willing to work only for a song?

Napster also points out that copyright law makes Footnotes allowance for so-called “fair use” of new tech- 1 Napster doesn’t sell stock to the public. 2 Jaan Uhelszki, “Metallica Sue nologies. In the 1970s, for example, Sony Napster for Copyright Infringement,” Rolling Stone.com, April 14, 2000. 3 Testimony of Hank Barry, Chief Executive Officer, Napster, Inc., Before introduced the video recorder, which gave people the Senate Judiciary Committee, Hearing On “The Future of Digital Music: Is There an Upside to Downloading?” July 11, 2000. (http:// www.senate.gov/~judiciary/wl7112000.htm)