April 22, 2004

Facing the Music

Litman: Proposals to legalize P2P -- focus on the mechanics.

Would any of these schemes actually work? Why or why not?

Neil Nathenal; first to suggest that we make it legal, and impose fee. Available in draft a few years ago.

Fred von Lohmann; David to record company's Goliath.

Dan Gervaise; studies on how it's working in Canada.

Ted Cohen; EMI. He's not here yet; we hope he'll show up.

Eric Garland; Big Champagne.

Sara Deutsch; Verizon, standing up for privacy of customers. Proposals suggest that we assign the job to the ISP. ISPs find that idea less than thrilling.

Neil: Right to get paid doesn't automatically mean right to control use of the work. People whould be able to use as they like, so long as noncommercial.

File sharing is a great thing; lots of creativity. (Quotes Larry Lessig; references Grey Album.)

Levy on products and services. People compensated according to measure of popularity.

This idea isn't new; this is part of a venerable tradition. It would expand exisiting in important respects. Levy would involve file sharing on top of private copies (distribution; uploading).

Levy should apply to all ways to get music.

Controversial: modifications should also be immune.

Would also apply to text and movies.

Commercial uses would be subject to traditional copyright law.

Criticisms: Is this fair to charge people who don't file-swap? Another--can we raise enough money? My answer is yes.

Fred: I'll be brief. EFF has come forward with VCL. Distinct from Nathenal's. Idea is borrowed from what occured with radio. Song writers objected to use by radio. Much of the same rhetoric was used. In the end, the solution was not to sue people one at a time. It was to create a collecting society. Voluntary; copyright holders pool their copyrights. Radio stations pay a flat fee.

Q: Why can't the music fan get the same deal that radio stations got? No need to amend copyright law. Why not offer license to end-users directly?

Minimizes government involvement; there would have to be antitrust oversight, a fair point.

Chief benefit--only downloaders pay. Anything that takes filesharing out from under "clouds" a good thing. A new platform for artists. Eliminates incentives to create DRM. No longer need to create copy-protected CDs, etc.

Criticism: why would P2P users pay? Collection society has an incentive to make it easier for you to pay then not to pay. Best ways to hook you as a customer. Could walk into a drugstore and buy your file sharing as a card. That's what you could expect. Still some enforcement; no way around that unless we change copyright law. It won't be efficient to sue people.

If you're caught, you get a fee -- not a mutl-million dollar kind of fine. Better than trying to move people en masse to less attractive alternatives.

Gervaise: Two and half questions about P2P.

Can P2P be stopped?
Should it?

Federal court in Canada decided that downloading is legal; people pay a levy on blank CDs and iPods and devices of that nature. No certainty as to "uploads"--we might upload from other countries.

Can it?

Lots of people doing it; younger people don't think it's wrong. Others think it is wrong, but won't stop.

20 percent say, yeah maybe we should stop. Reflects the decrease in FS.

The strategy doesn't seem to be working all that well.

Should it?

Every download a lost CD sale? I disagree.

Don't listen to MPAA; it tried to kill VCRs. Tried to kill photocopy machine.

Independent labels say, we're making more than ever.

From a business standpoint--I don't think the case has been made that FS is bad.

P2P is Good Business.

Five dollars a month, would generate plenty of money. No CDs to make, etc. One dollar in other parts of the world.

In Canada we added levy on blank media. This would generate even more money.

Why Not Yet a Business?

Propertization paradigm. This irritates people. Scarcity does not apply to the Internet. This paradigm does not apply. Music wants to be found.

Eric Garland: We're not advocating any particular model. Since 1999, we've been measuring activity on the Net. We're more like Google than Nielson. We've had a dispassionate view. Our success depends on the success of all the other players here.

Once upon a time, we would have been sitting here being presented w/solutions: litigation, legislation, education, speed bump and finally, some lunatic wearing a cap saying " Legalize it."

Nothing so much as steady increase in popularity of file sharing. The solution is one like this. NO result of this campaign. Only popularizes P2P. Talk about conflicting studies in CDs and filesharing. "Singles market" -- people don't rip off entire CDs. They pick and choose. You don't download each and every song. We're comparing apples and oranges. The 45 went away, as did the cassette and CD single. This is the birth of a new product. Not significant correlation. 8-12 songs ripped, and people still buy the CDs.

Sarah D: Education strategy/litigation strategy. Fueling call for compulsory license. Verizon raised the idea after the CBTPA--would have granted government right to mandate DRM.

Content community -- they reacted terribly -- stampeding to kill it. Today the FBI raided a school in Pheonix. Doing something important rather than hunting Osama and fighting terrorism.

Monitor every song, bill you for it. Not a good idea. Unrealistic. We're interested in EFF's VCL.

Neil's system calls for a levy -- I'm wary of that. Tax. Bad precedent.

Look at compulsory licenses -- what's working and what's not. When the industry likes it, they call it statutory; if they don't they call it compulsory.

Piano roll -- license still exists today, and still rewards the labels today. Soviet-style filing -- too much of a burden. Hard to identify copyright owner. They want to expand this license. Music publishers tried to charge for incidental copies. Maybe look at that license and modify.

Jessica Litman: How do we divy up this money? Daniel, how does it work in Canada?

[...]

Garland: Big Champagne can still see what's going on-- much more granular than airplay! You can cut the data much more finely, compensate smaller artists better.

Most people, most of the time are doing the same thing they used to do. Napster was a big event, so that caused some migration. But shy of that, people don't move. No mass exodus to Freenet or Waste. You can keep suing, they will still be on there, mroe and more.

Audience Q & A:

Q: How do we make sure that the artists are compensated?

Nathanel: I think we'd need a multinational copyright convention.

Q: What about the downloads elsewhere?

Fred: This is a problem not unique or special...doesn't require a perfect solution before anyone moves. Global music business isn't truly global. Copyright has always been a national question. We don't have to solve everyone's problem everywhere.

Sarah: They've enacted an IP Enforcement Directive, etc. Piracy Deterrence Act -- lowers standard. Mere knowledge, you go to jail for 3-5 years. Only 1000 works. Warning notices, databases, etc. Really dangerous criminalization of this area.

[...]

Garland: Stance is zero tolerance. It's an overwhelmingly pirate market. Industry isn't interested in discussing solutions.

Green Day cover--"I fought the Law" downloaded on KaZaA--MP3 lovers loved it, with or without irony.

Q from Seth Schoen: Why exclude software?

Nathenal: Economics very different. Vastly complicate matters.

Q: We have a good collecting society for composers but not for labels. How do you answer the "antitrust" issue answer?

Fred: You'd need a new collective anyway. Who knows who to pay? The record labels do. There is an entity working on this: Sound Exchange. Rate was too high, I know. But one positive ancillary is the creation of this body that is building data.

Sarah: Call for Copyright Office to create database -- and to require people again to file; that's why we have the big hole.

Brad Templeton: I have a website listing every solution I've ever heard. My solution is a reversal of micropayment. Microrefunds. Default would be to pay, explicit action not to pay. Defaults control the world.

Solutions can be applied to regular books, other media, etc. These solutions don't extend. What's the thinking on software? On fields outside of consumer media?

Software won't face same challenges. Copyright is used to organize the market. We're denying the market. With software we never had that problem.

Fred: Virtues of EFF's position: industry-led solution. If you are a major music company today, choices are stark. Take steps to stop it, people suffer collatreal damage. My urging--rightsholders will come around to VCL if other options fail.

Nathenal: I propose compulsory because they won't give up control (?) Record companies lose when you see something new open up. Politically speaking, they won't agree to compulsory, of course, but theoretically...

Q: I'd like tech detail from Eric Garland -- how do you gather this data? I'm imagining an attack to misrepresent in data.

Eric: All methods are flawed. Challenge data collection. We can pretty much suss out "gaming the system."

Q: You could write a program.

[...]

Fred: No reason to choose one. Could do a number of sampling techniques. This could help to spot attacks. You'd see anomolies, see a tip-off.

Hard to keep an attack both successful and invisible.

Harder with small indie band -- someone trying to go from 50-75,000 downloads. In any case, you're not going to have census-based accuracy.

Liz Rader: The history of the webcasting rates is a sad tale. RIAA manipulated the proceeding. My Q: Have you thought about this example? Do you have a solution?

[...]

Sarah D.: Licenses subject to gamesmanship. The reality is that the RIAA would quickly extort the price.

Fred: This is why I disagree w/compulsory. Difference: constraint is piracy. If you charge $50 months, you lose. Same thing w/VCR. Record labels have an incentive to protect CD business. A collecting society would have a very different business incentive.

[...]

I say give it 12-18 months, then they'll come around.

Nathenal: 12-18 years.

Gervaise: If Ted were here, he'd say when hell freezes over.

Fred: Yeah, and that Eagles album is pretty great, eh?

Posted by Donna Wentworth at April 22, 2004 04:03 PM
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