what you don't know can hurt you
The Copyright Cuffs
Why we should care who gets the merchandising deal from a movie or the song tie-in on a variety show.
Jonathan Zittrain
A couple of years ago I was talking with a law school colleague about cyberlaw and the people who study it. "I've always wondered," he said, "why all the cyberprofs hate copyright."
I don't actually hate copyright, and yet I knew just what he meant. Almost all those who self-identify as cyberspace law scholars agree that copyright law is a big mess. So far as I can tell, federal courts experts don't reject or loathe our system of federal courts, and criminal law experts split every which way on the overall virtue of the criminal justice system. So what's with cyberprofs' uniform discontent about copyright?
I think an answer can be gleaned from the tax scholars. Without decrying the concept of taxation, every tax professor I've met regards the U.S. tax code with a kind of benign contempt, explaining it more often as a product of diverse interests shaped from the bottom up than as an elegant set of rules crafted by legal artisans to align with high-level principles about the most just way to redistribute resources or to maximize social welfare.
Copyright is like that too, and while I hate its Platonic form no more than the typical tax maven hates tax, I find myself struggling to maintain the benign part of my contempt for its ever-expanding 21st-century American incarnation. A gerrymandered tax code primarily costs the public money- measured by overall inefficiency or extra taxes unfairly levied on those without political capital. But copyright's expanding cost is measured by a more important, if inchoate, currency of thoughts and ideas.
The Law and the Reality: From TVs in Restaurants to Woody Allen Quotes
We live today under two copyright regimes-the law on one hand and reality as experienced and practiced by the public on the other. These regimes' orthodoxies have become increasingly divergent, but until recently they governed completely discrete spheres.The U.S. legal regime is found within Title 17 of the federal code. It proscribes such acts as the public performance of music without payment to the composer, or the copying of books without the permission of the author (or more likely the company to whom the author long ago assigned rights).
The limits on behavior enumerated in the first regime have gone far beyond the wholesale copying of books, maps and charts covered by the first copyright act of 1790. They now extend to computer software, dances, boat hulls (delineated in a 1998 amendment as "the frame or body of a vessel including the deck, but not the rigging") and music (Congress covered performances in 1909, and copies of sound recordings in 1971). What the public can and can't do is now described at a dizzying level of detail worthy of the most byzantine tax code.
For example, bars and restaurants that measure no more than 3,750 square feet (not including the parking lot, so long as the parking lot is used exclusively for parking purposes) can contain no more than four TVs of no more than 55 inches diagonally for their patrons to watch, so long as there is only one TV per room. The radio can be played through no more than six loudspeakers, with a limit of four per room. That is, unless the restaurant in question is run by "a governmental body or a nonprofit agricultural or horticultural organization, in the course of an annual agricultural or horticultural fair or exhibition conducted by such body or organization." Then it's OK to use more speakers.
This astonishingly elaborate and expansive copyright regime isn't fed only by statutes, of course. Judges' interpretations account for much of its reach. The notion of "contributory" copyright infringement-in essence, aiding and abetting copycats-is entirely judge-made. In conjunction with a statutory limit on creating not just copies but "derivative" works of a copyrighted original, a theory of contributory infringement led two courts to outlaw the production by third parties of cassette programs designed to be inserted into the belly of Teddy Ruxpin talking stuffed animals. The idea was that by pushing the play button when a non- Teddy Ruxpin story tape was inside the creature, children would be creating a contraband derivative "audiovisual work comprising animated plush toy bear with unique voice." Since toddlers are largely unsusceptible to cease-and- desist letters, it fell to the cassette manufacturers to stop providing the ready means for the kids' illegal behavior.
For all of its detail, however, Title 17 remains stubbornly vague, recalling Woody Allen's indictment of a bad restaurant: "The food at this place is really terrible...and such small portions." Including Woody Allen's quotation here is probably fair use, so it's OK to repeat it without his permission-but we'd have to risk a lawsuit to be sure. No wonder most publishers proceed as if fair use doesn't exist at all, asking permission to use every quote-or failing that, doing without.
Con't
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Copyright Term Extension: Does A Bad Report Cost More Than A Good Report?
Lessig
As Michael Geist writes, it is increasingly the practice of the US government to export its copyright policy though bi-lateral trade agreements. One example is the trade agreements being concluded with Australia right now that will require Australia to increase its copyright term to life plus 70.
The Allen Consulting Group has prepared what it apparently considers an economic analysis of the proposed Term Extension. The report was commissioned by the Motion Picture Association, among others. The report is embarrassingly poorly done.
I describe some errors in the extended entry below. But I hope for the Allen Consulting Group that this report is not representative of its work in general.
While the report describes a 1989 article by Posner/Landes as the "major theoretical contribution" to the analysis of term extensions, the most striking feature of the Allen report is its failure to address the arguments made by 17 economists, including 5 Nobel prize winners, in the brief submitted in Eldred and then published by AEI-Brookings. While that brief has been smartly criticized (though I believe erroneously, as I will describe in another post) by Liebowitz & Margolis, it certainly sets the framework for any economic analysis of term extension. (The Posner/Landes piece is about the length of terms generally, not term extension).
As Akerlof, et al., frame the analysis, the fundamental distinction in any consideration of term extension is the difference between extending existing terms, and extending terms prospectively. This distinction appears no where in the Allen Consulting Group report. Thus throughout the report, one is bounced around with arguments that are true for prospective extensions but false for retrospective extensions, and false for prospective extensions, but true for retrospective extensions. While the report cites the brief in a footnote and to accompany another cite, it nowhere addresses this core question that brief raises: Whether or not you believe extending terms in the future makes sense, what possible argument is there for extending terms for works that already exist?
In America, the answer to that argument was simple: Hollywood benefited. But what is the argument in Australia?
More frustrating is the pudginess of this argument that purports to be economics. There's lots saying that both sides exaggerate their claims, but nothing to provide any actual evidence to evaluate whether any claim is exaggerated. And then, after acknowledging there is no useful actual evidence at all, the report concludes that on balance, the effect of the extension would be neutral, and so Australia should do it.
I've put some notes on the report here that you might find useful as you read through their argument. No doubt I'm not a neutral in this debate. But I only hope the Allen Consulting Group got alot of money for this report. It certainly won't help its reputation as a firm that provides objective economic analysis.
http://www.lessig.org/blog/archives/001522.shtml#001522
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Buck a Song, or Buccaneer?
Leander Kahney
Apple Computer's iTunes Music Store for Windows appears to be off to a grand start, but no matter how successful it may be, the online store will never, ever have the slightest impact on the file-sharing networks, experts say.
Launched last week, Apple's iTunes jukebox software and associated online store had attracted a million Windows users in just over three days, Apple said Monday.
In the same period, the iTunes store sold 1 million songs at a buck a pop -- twice as many as were sold in the store's first three days of existence this April, when it was open only to Mac users. To date the store has sold 14 million tunes, more than 70 percent of all the music sold online.
To hear Apple's CEO Steve Jobs tell it, the iTunes store is the beginning of the end for the file-sharing networks.
"This has been the birth of legal downloading," Jobs declared at last week's flashy launch event.
He added, "We're going to fight illegal downloading by competing with it. We're not going to sue it. We're not going to ignore it. We're going to compete with it."
According to Jobs, competing with file-sharing networks means providing things like reliable, one-click downloading, good-quality sound and liberal usage rights. Plus, buying songs from Apple is legal: No one is going to be sued by the Recording Industry Association of America for doing it.
"It's good karma," Jobs said. "You're supporting artists. You're not stealing."
So confident is Jobs of competing with the file-sharing networks, the store will sell 100 million songs before the end of next April, Jobs predicted.
But to Eric Garland, CEO of BigChampagne, a Beverly Hills, California-based research firm that tracks file- sharing networks, 100 million songs is the teeniest, weeniest drop in the bucket.
"100 million songs in a year sounds like a lot of songs," he said. "But it's a tenth of all the songs available at any time on Kazaa. It represents a tiny fingernail, a sliver of a fraction of the downloads from Kazaa."
Garland said on average, there are 700 million files being traded on Kazaa, and 900 million files at peak. Most of it is music, he said.
"When you look at the (Apple iTunes) numbers, they are very modest," he said. "You're talking about a mom-and-pop business when compared to the millions in the file-sharing free-for-all.... Relative to the MP3 phenomenon, it's a small revolution."
Garland compared the iTunes store to a business bottling water. Apple might be very successful selling bottled water, but most people still will get their water from the tap, he said.
"They might create a successful business, but they are not tackling the main point of consumption," Garland said. "It's like charging a premium for every thousandth (song) download, but most music is still being downloaded for free."
Fred von Lohmann, senior staff attorney with the Electronic Frontier Foundation, agreed.
"I think it's exciting, and it will attract several hundred thousand customers," he said. "It's just not a compelling offering to 60 million file sharers. It's not going to entice Kazaa users to give up file sharing."
Von Lohmann said the store may become a "great niche product" like a boutique motorcycle firm: Apple's online store may be successful, but it will never be the vehicle of choice for most people, he said.
Both von Lohmann and BigChampagne's Garland scoffed at suggestions that the music store would increase the number of files on the file-sharing networks.
Garland said everything at the iTunes store already is available on the file-sharing networks. "There's far more music on Kazaa than on the Apple store," he said. "Why would Kazaa be getting its music from that network? I don't think the Apple store is going to be feeding music to Kazaa."
The one exception, Garland said, are those tracks exclusive to the Apple store, which in every case have been uploaded to the file-sharing nets within hours of their release, sometimes before, he said.
"Every exclusive on the Apple store is immediately available on Kazaa," he said. "And many, many more people are acquiring those exclusives from Kazaa than (from) the iTunes music store."
(Music sold at the iTunes store is encoded in copy-protected AAC format, which is easily circumvented, allowing files to be converted to the MP3 format. Though AAC and MP3 are both compressed formats, degradation of quality is minimal, Garland said.)
"In a P2P world all it takes is one person to upload some content to the file-sharing networks, and then everyone else can download it," said von Lohmann. "It's the smart-cow problem. It only takes one smart cow to open the latch of the gate, and then all the other cows follow."
An Apple spokesman declined to comment beyond the statements made by Jobs at the launch event.
http://www.wired.com/news/business/0,1367,60901,00.html
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Audible Service Could Teach Music Industry a Lesson
Lisa Napoli
Reasonably priced secure downloads. Compensation for writers and artists. Peaceful alliances between publishers and online distributors.
A utopian vision for the music industry? Perhaps. But that approach, which appears to be the goal of Apple Computer's iTunes music store and others like it, is already a reality for delivering audio books and other spoken word offerings over the Internet, as created by Audible, a small company in Wayne, N.J.
Technological challenges for Audible - like having to invent a playback device to fulfill the promise of mobile listening, and a small target audience not accustomed to going online - have been daunting. So have financial woes: Since the company went public in July 1999, its stock has ranged from a high of $25 a share to just pennies, and Audible has never made a profit. The stock closed at $2.03 on Friday, up 44 cents. And yet, in part because of investors like Microsoft, Amazon and Bertelsmann, Audible, which was begun in 1995, survived an era that destroyed many other digital start-ups.
Survival also has something to do with the fact that Audible's business has nothing to do with music, Donald R. Katz, Audible's founder, said. While the music industry has struggled with how to work with the Internet, initially denying it was even a threat and keeping it at arm's length for years, Audible has been using digital downloading to reach new audiences and to deliver the wares of the audio book industry more efficiently and less expensively.
"Consumers are listening to audio books on cassette, on CD, on MP3's," said Mary Beth Roche, president of the Audio Publishers Association, a trade group. "Our challenge in the bricks-and-mortar stores is limited shelf space. How do you figure out what format for which title?''
Digital downloading offers a solution. Ms. Roche, who is also the publisher of Audio Renaissance, an Audible partner, said that the audio books industry had traditionally lagged behind the music business in technological innovation. But it has forged well ahead of the record business in developing a viable and secure delivery system that customers are willing to pay to use.
"Audible was able to come up with a digital rights management system that worked and made everyone comfortable,'' she said. "Maybe we benefited because we were a smaller business."
There are big differences between the two recording industries. Audio book sales, about $2 billion a year, are a small fraction of the music industry's $12 billion in revenues from the United States. Unlike CD's, audio books - often filling four or more cassettes - can be unwieldy, more naturally suited to the digital format. And users of spoken word content, which covers a variety of products, including radio programs and daily digests of newspapers, are typically older, which makes them more respectful of copyright laws, industry executives say. "A book is a substantial cultural artifact, where a song doesn't have much weight to it," Mr. Katz said. He cited the "politicization of sharing music'' as another reason for the music industry's problems.
An author and former journalist, Mr. Katz founded his company before the term "dot-com" was tacked on to every business plan, before portable digital audio players existed, and when rumblings about music piracy were as new as the Web itself.
At the beginning, Mr. Katz's team had to concoct not just the software for secure digital delivery of its offerings but the portable hardware device on which to play them back. Initial users had to buy portable devices that predated MP3 players; the company's first portable digital audio device is so innovative that it is preserved as an artifact at the Smithsonian Institution.
"One of the reasons we didn't grow as quickly as we could have is that the business was predicated on the ubiquity of playing devices," Mr. Katz said. The devices have only taken off in the last two years, particularly with the introduction of the Apple iPod, which works with Audible.
On Thursday, Audible's reach grew with the announcement that thousands of hours of its offerings will be available from Apple's iTunes music store.
Audible long ago abandoned making its own device; it now gives away an MP3 player as an incentive for new subscribers.
Persuading audio book publishers and radio producers to allow him to sell their content online was not easy at first, Mr. Katz said, particularly because many publishers were still feeling the sting of failed experiments with the CD-ROM. But unlike the record industry, book publishers agreed to share their rights long before a free alternative like Napster or Kazaa came along to make copyright violations as easy as clicking a mouse.
"Audible had to go out and convince publishers that this new technology would shepherd their content in a secure way and that it wouldn't cannibalize their business," Mr. Katz said. "I was pretty honest that the revenues would be very, very small at the beginning. Everybody basically was fundamentally happy to have this extra revenue stream."
The market for audio books has grown 360 percent since 1990, industry figures show. One in five American households includes someone who has heard an audio book, said Robin Whitten, editor of AudioFile magazine. "When I started you had to explain what an audio book was to people,'' Ms. Whitten said. "Now it's part of most people's experience."
As the business has grown, Audible has managed to carve a niche. Its alliances with publishers have improved and offerings have become more comprehensive. Audible is growing but it is not yet a financial success, Mr. Katz said. "We're getting close to being self-sustaining,'' he said. "The big challenge is it's just not well known enough."
http://www.nytimes.com/2003/10/20/te...n er=USERLAND
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The RIAA and the Music Piracy Debate
Sen. Norm Coleman (R-Minn.) was online to talk about his efforts to rein in the recording industry's aggressive legal war against people who illegally trade music online. Piracy is wrong, Coleman agrees, but so too are some of the industry's tactics.
An edited transcript follows.
Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.
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washingtonpost.com: Good morning Senator Coleman, thanks for joining us today. The war over online file swapping has been escalating in recent months, as was made clear a hearing you presided over last month. Having failed in efforts to shut down networks like Kazaa and Morpheus, the Recording Industry Association of America (RIAA) has mounted a legal blitz against individuals who trade songs online. The RIAA says the lawsuits are among the few effective tools they have to combat music piracy, but you and others have expressed concern about their tactics. Can you describe your concerns?
Sen. Norm Coleman: Good morning. It's great to be here. I've noted publicly that law and technology in this area seem out of sync. This forum is a great opportunity for policy and technology to be in sync.
First we recognize that file sharing is wrong. It is taking without compensation someone else's property.
But the question is how do you stop what 60 million Americans are already doing? I have three concerns about the RIAA approach.
First, the broad grant of subpoena authority has the potential to sweep in folks who may not have done anything wrong.
Second, the civil penalties in this area, including fines up to $150,000 per song, are clearly excessive. They can be used to intimidate and threaten folks who may or may not have done anything wrong.
Finally, I also have concerns about the impact on personal privacy protection. The technology used by the RIAA and P2P networks has the potential to undermine personal privacy protections.
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Bangor, Me.: What's your reaction to the RIAA's latest news that they will send warning letters before dumping lawsuits on suspected file sharers?
Sen. Norm Coleman: Good first step. This action still doesn't solve the underlying concerns I raised before. You are not going to change the behavior of 60 million people through the use of lawsuits alone.
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Macon County Line: I heard you want to introduce a bill that would affect the recording industry's campaign against file sharing. What will it do?
Sen. Norm Coleman: We anticipate having one more hearing before we begin looking at legislation. There is existing legislation that would change the subpoena process. I am in support of that in concept, but we need to hear from some of the technology companies before we finalize any legislative approach.
I do not believe the solution to this problem lies simply in legislation.
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Lyme, Conn.: It is my understanding the music industry has chosen a few unfortunate people and decided to make examples of them by suing them for large amounts of money in hopes of deterring others. Wouldn't it be more effective, and fairer, if the industry sought smaller fines from a larger number of people? If people thought they could actually be caught and could face reasonable penalties, wouldn't that deter more people?
Sen. Norm Coleman: That is a very reasonable approach and one we are looking at closely. The punishment needs to fit the crime.
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Greenfield, Mass.: How do you feel about the RIAA blaming online music piracy for their drop in sales. Do you think other factors, like the economy, could be just as much to blame?
Sen. Norm Coleman: The online piracy is certainly a factor in sales reduction, however so are high prices. It is clear that consumers deserve to have more safe, legal, affordable online downloading options.
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Lansing, Mich.: Do you think that the recording industry is in part to blame for the current degree of piracy of copyrighted music? What I do not understand is why it has taken approximately two years since the shutdown of Napster for a convenient legal outlet for mp3s to emerge, such as Apple's iTunes. I do not know if the executives of the music industry ever tried listening to mp3s on their computers and realized that this was a extremely convenient way to listen to music (more so than compact discs) that was here to stay.
Sen. Norm Coleman: I do believe the industry should have more aggressively addressed consumer needs a long time ago.
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Red River Rock, Ark.: What do you think of the new guy running the recording industry? He doesn't seem like a "music" kind of person. What sort of experience does he bring to this situation?
Sen. Norm Coleman: I am a big fan of the "new guy." Let me just say this, the issue here is not just a music issue, it is a meeting consumer needs issue. It's solving a problem in a "reasonable way" issue, and the new guy, Mitch Bainwol, has a history of getting that done.
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Arlington, Va.: What is your reaction to the latest word that the RIAA is sending warning letters before filing anti-piracy lawsuits? Is this enough, or just "a step in the right direction"?
Sen. Norm Coleman: As I stated before, a step in the right direction.
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washingtonpost.com: Senator Coleman, many of our participants are asking questions about the state of copyright law in general. Do you think 1998's Digital Millennium Copyright Act struck the right balance between the rights of consumers and those of intellectual property owners? If not, what can Congress do to adjust that balance?
Sen. Norm Coleman: I think one of the problems with the 1998 DMCA is that it was created before the advent of KaZaA, Napster and the P2P technology that is used today to facilitate illegal downloading. This is what I mean when I say the law and technology are not in sync.
It is a great challenge for Congress to "adjust that balance" because technology changes so much quicker than the legislative process.
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Salt Lake City, Utah: I have heard many people say that it's not stealing if you don't sell it. How do we educate the public?
Sen. Norm Coleman: First, the P2P can do a better job of letting users know that trading copyrighted music online is illegal.
Secondly, the industry should use the same moxie it employs to sell its music, to educate consumers.
Third, we all have to recognize the challenge of educating young people that something that technology makes so easy; that you can't touch or feel, is still wrong.
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Washington, D.C.: Gartner reports that a substantial number of P2P users utilize the same to "sample" music. How often have you bought a $20 album, only to find a single song worth listening to. This accounts for the popularity of "listening posts" popular at music stores. Do you think industry is missing the opportunity to use P2P as a marketing tool?
Sen. Norm Coleman: Yes.
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Phoenix, Ariz.: I am concerned that in an effort to protect copyrights, the FCC and congress are poised to mandate anti-copying devices in consumer electronics that will also prevent me from moving my own legally-purchased music and video between my home, car, and portable devices, or recording TV programs for time-shifting. (Such as transferring CDs to my iPod, or watching DVDs on my laptop computer.)
How do you view the apparent tradeoffs between preventing unlawful digital duplication through technology with what are today considered fair use by honest consumers?
Sen. Norm Coleman: This is a very complex issue. I share your concerns but on the other hand we need to bring the hardware and software industries into this discussion. They need to be part of the solution. I anticipate my next hearing will address some of the technology issues.
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Alexandria, Va.: What's the atmosphere like up there when it comes to file sharing. I understand there are a couple of bills that vaguely talk about copyright protection (I think this is in the House) but is there any will to change the legal environment beyond the bill you're proposing?
Sen. Norm Coleman: Though everyone would say that they want a fair and balanced approach there is no consensus today on how to achieve that approach. The reason I hold hearings is not to rubber stamp preexisting views, but to try to find common ground that protects the future of the entertainment industry while at the same time meeting consumer needs and treating them more fairly.
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Tupelo, Miss.: What's your biggest objection to the RIAA subpoenas? Are you concerned about how easy it is for the industry to get them? how freely they seem to be doling them out? or how consumers can be hit by lawsuits without ever being informed that they are the subject of a corporate investigation?
Sen. Norm Coleman: All of the above.
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Last Mile Gorge, Penn.: I must be the only person in the world besides Cary Sherman and co. who thought going after the 12-year-old girl was a good idea. Stealing is stealing, even if you're on a ventilator. Do you concur?
Sen. Norm Coleman: I agree if you are stealing and you are on a ventilator, it's wrong- but we don't pull the plug. The penalty has to fit the crime. I'm concerned about making an example of a few people to change the behavior of 60 million people. What is the fair response to the actions of this 12-year old honor student.
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Arlington, Va.: What do you hear from constituents on this issue of the RIAA's lawsuits? Has it been a hot-button one, or overblown by the press?
Sen. Norm Coleman: For a while I was getting more comment about this than the war in Iraq. I have a 13-year old and a 17-year old. Like many other parents, we know this is something our kids are dealing with.
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Arlington, Va.: Does any other industry group enjoy the powers given to the RIAA? For example, can the Business Software Alliance get a clerk to issue a subpoena in cases of suspected software piracy?
Sen. Norm Coleman: The authority under the DMCA is not given to the RIAA specifically, rather it is given to any copyright holder. Some of my colleagues have raised concerns about pornographers utilizing the same authority to investigate the lives of whomever they choose.
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Edina, Minn.: How do you think the recording industry moves away from penalizing P2P users and moves toward deploying their own network of legal file sharing? In other words,when do you think they will capitalize on the technology rather than punishing people that are ahead of the curve?
Sen. Norm Coleman: The long term solution to this problem will not come about solely through lawsuits. That is simply one tool.
I do not think the answer lies in simply more legislation. The solution must be led by the industry and be a combination of law, technology, and creative business solutions. The industry has a right to be protected, but you have to do a better job of meeting consumer needs.
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St. Paul, Minn.: You say the penalties are too high, but clearly record companies are in a tight spot here. With 60 million Americans trading songs, they can only hope to go after a tiny fraction of the offenders. Don't you think they need stiff penalties if they hope to scare anyone away from piracy?
Sen. Norm Coleman: When the current law provides a penalty of up to $150,000 per illegally downloaded song. We know that penalty will never be imposed. My concern is the threat of that penalty is so severe that you force someone who didn't do anything wrong to settle because of fear of bankruptcy.
Lorraine Sullivan, one of the witness at the hearing related that her discussions with the RIAA were like talking to an abusive debt collection agency. I have concerns about using the law to threaten people. I don't think you are going to change the behavior of 60 million consumers by the threatening a few individuals with lawsuits.
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Washington, D.C.: You mention your myriad concerns both with the RIAA subpoenas and with the damages awardable under existing copyright law, but the record industry is bleeding and these lawsuits seem to be the only bandage that works. What kind of an olive branch you're willing to extend to artists so they can track down the people that steal from them?
Sen. Norm Coleman: Artists have a legitimate right to be compensated for their work. My goal is a stronger recording industry with more workable protections for artists. Testimony at the hearing reflected consumer backlash to the RIAA litigation strategy.
As stated before, more safe, legal, affordable downloading options will provide greater opportunity for artists to be compensated for their work.
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Salt Lake City, Utah: What do you feel would be a fair and proportional punishment for unauthorized file swapping?
Sen. Norm Coleman: We are trying to sort that out right now. The purpose of my hearings is, in part, to help determine the answer to that question.
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Cherry Hill, N.J.: OK, everyone's asked you whether you've been a file sharer. Now, are your kids? What would you do if you had a subpoena served and you end up under the lawsuit gun because one of your kids couldn't keep away from a free copy of that latest Avril Lavigne single?
Sen. Norm Coleman: First, I'd be pretty mad at my kids. I've had the discussion with them, but as any parent can tell you, it is difficult to control the actions of even the most responsible teenager.
The reality is I would have the resources and knowledge of the law to deal with this issue in a way in which it would not be much more than an embarrassment. However, many consumers like Lorraine Sullivan are frightened by the prospect of litigation. What will it cost? What are the penalties? How will I pay?
Again, I want to ensure the penalty fits the crime. I also want to ensure the people who are targets of investigations are in fact those people who engaged in the illegal downloading.
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Thunder Bay, Minn.: Senator - good to "see" you online. You say $150K is too much to demand for one stolen song. Last I checked they haven't exercised that clear legal right to go for that much cash. If they're suing people and settling for $2,000-$3,000 a pop -- and they're suing 1000s of song swappers -- it seems like the RIAA already is operating with forbearance. That said, what's a good maximum pairer damages award?
Sen. Norm Coleman: Glad to see Thunder Bay online. Two observations. First I am pleased the RIAA seems to be using forbearance however, the law does not require that and gives what I think is excessive broad discretion to protect their copyright interest, (both in subpoena power and potential penalties).
Again, part of this process of holding hearings is to find the answer to that question.
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Binghamton, N.Y.: Sen. Coleman - good morning - I know it's a little off-topic, but who were some of the acts you worked with before you were in Congress?
Sen. Norm Coleman: I was a roadie for ten years after 1969. I drove a truck for Jethro Tull. Carried some equipment for Savoy Brown. Did concerts at both the Spectrum in Philly, and the racetrack at Laurel, Maryland. One of my jobs was to stand behind the big marshall amps and make sure they didn't fall over. In those days there was no wireless technology.
That was a long time ago in a universe far, far away.
It was fun being online, I will try to get to some of the unanswered questions later. If you have any additional comments or questions, please contact me at
opinion@coleman.senate.gov
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washingtonpost.com: Unfortunately we're out of time. We would like to thank Sen. Coleman for taking the time to join us and our audience for asking so many thoughtful questions.
http://www.washingtonpost.com/wp-dyn...-2003Oct9.html
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Cinema Admissions To Fall In 2003
Global cinema admissions will fall by 3.8% in 2003 to 8.46 billion, according to a new report from Informa Media Group. This follows a strong year in 2002 and declines in 1998, 1999 and 2000.
However, Global Film: Exhibition & Distribution - Sixth Edition points out that global box office receipts will drop 2.6% to $20.1 billion in 2003. This is the first fall in box office receipts for more than a decade.
Simon Murray, publisher at Informa Media Group, said: "A stronger slate of film releases in the second half of the year is not expected to be enough to swing the whole year round to higher figures than 2002. Going forward, industry growth is likely to be muted as the multiplex building boom is over in many countries. In fact, several countries appear to be overscreened, so the net screen count will fall in these territories, including the U.S."
Despite the poor estimates for 2003, admissions and box office figures for 2003 will still be higher than for 2001. The U.S. will see a 5% decline in 2003 and the UK will suffer a 4% fall. Global admissions are not forecast to beat the 2002 figure before 2010. However, the 2002 box office figure will be topped in 2005 as higher ticket prices in multiplexes have a greater effect.
Admissions by Continent (million)
1995 2002 2003 2010
Asia Pacific 6,352 5,317 5,156 5,129
Europe 826 1,167 1,104 1,227
Latin America 163 385 370 429
Middle East/Africa 185 155 150 149
North America 1,364 1,770 1,682 1,803
Total 8,889 8,793 8,461 8,737
Source: Informa Media Group
Despite the low admissions growth, global box office figures are expected to rise 14% between 2003 and 2010 to $23 billion - or nearly double the 1995 total. Much of this increase is due to multiplexes charging more for tickets than traditional cinemas.
Gross Box Office by Continent ($ million)
1995 2002 2003 2010
Asia Pacific 2,841 3,502 3,470 4,061
Europe 3,266 5,654 5,423 6,206
Latin America 308 1,087 1,065 1,416
Middle East/Africa 83 102 101 118
North America 5,934 10,282 10,025 11,126
Total 12,432 20,626 20,084 22,927
Source: Informa Media Group
Asia Pacific dominates the admissions figures, but low ticket prices mean that its influence on gross box office revenues fell in the late 1990s. The U.S. will take 46% of global box office in 2003, and this share will fall only slightly to 45% by 2010. The top 10 countries account for 85% of global box office in 2003, with this proportion likely to drop only a little by 2010.
Japan is the most lucrative market per screen, with Hong Kong, South Korea and Singapore following. These top earners are ideal markets for multiplex expansion. The global average revenue per screen is $144,000 in 2003, with the U.S. at $271,000.
http://www.informamedia.com/NASApp/c...=2001 7112810
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U.S Electronic Media & Entertainment Spend Exceeds $100 billion
U.S. consumer expenditure on electronic media and entertainment passed the $100 billion mark in 2002, according to a new report from Informa Media Group. U.S. Electronic Media and Entertainment forecasts that a further $20 billion will be added to this total by 2010. This growth comes despite the cyclical nature of the games industry, the impact of piracy especially on the music sector and the decline of the VCR/VHS market.
Consumer expenditure on electronic media and entertainment
$ million 2002 2003 2005 2010
TV subscription/PPV/VoD 46,156 48,829 53,459 64,512
DVD/video 20,302 21,634 23,204 21,555
Theatrical Exhibition 9,520 9,806 10,102 10,883
Games 12,548 10,565 7,135 8,870
Music 12,698 11,979 12,130 15,388
Grand Total 101,224 102,813 106,030 121,208
Source: Informa Media Group
Subscription and PPV/VoD revenues mainly from cable and satellite operations provide the bulk of the revenues - 46% in 2002 and 53% in 2010. The sector will grow by 40% during this period, mainly due to consumers' conversion to digital packages.
Digital TV will also extend its market share due to a stagnant film exhibition sector, and the music industry's ongoing battle against piracy, especially peer-to-peer downloads and CD burning. Furthermore,
DVD growth will be rapid, but will not be able to make up the shortfall from VHS losses. The games sector appears to follow a five-year cycle, which is principally dictated by the launch of a new generation of consoles.
http://www.informamedia.com/NASApp/c...034 683211732
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Inexpensive Animated Movies Could Transform The Movie Industry
Sander Olson
Preliminary evidence suggests that computer-generated animated movies are becoming less expensive to make. Companies like Pixar have been making feature-length animated movies at least since Toy Story, and many animated movies have been quite profitable. Most recently, Finding Nemo has been a critical and financial success. Unfortunately, the high cost of making animated movies has impeded development of the genre. Now, however, new animated movies are being developed that are in line with regular movie production costs; one feature-length animated movie called Valiant should only cost US$40 million to make. Moreover, Vanguard Films, the studio which is producing these movies, is confident that it can churn out a series of high- quality, full-length animated movies for $40 million or less. The original Shrek cost $60 million to make, and the sequel, Shrek 2,will probably cost more than $40 million to produce. Nevertheless, some conventional movies now cost $180 million or more to create, making animated movies look cost-effective by comparison. Computer power is now sufficiently great that generic PCs can now do much of the rendering work needed to make an animated film, and there is now a growing number of companies capable of creating animated movies. By contrast, many conventional movies are becoming increasingly expensive to produce, and even keeping production costs steady will be a challenge for the movie industry. If the average cost of creating animated movies moves to $40 million or less and these low-cost animated movies do well at the box-office, the animated movie genre could become dominant. Conventional production studios may soon find themselves losing business to animated movie companies, and animated movie companies may increasingly turn to outsourcing of labor in order to further reduce production costs.
http://www.geek.com/news/geeknews/20...1020022264.htm
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Plan For 'Window On The World' Attraction
Ananova
A window between cities that allows people hundreds or even thousands of miles apart to meet and talk could make its debut in Britain next year. Tholos, named after a type of circular ancient Greek temple, consists of a large round screen nearly 10ft high and 23ft wide. Its designers hope to see one of the first two in the world become a new tourist attraction in the centre of London. The London Tholos would be linked to an identical one in Vienna. Through them, people in both cities will be able to see and hear each other in real time.
The cylindrical structure contains technology that simultaneously transmits and receives high definition live moving images. People standing in front of London's Tholos would see a wrap-around picture of the scene in Vienna. At the same time, a similar London image is displayed in the Austrian capital.Citizens in both countries would be able to face each other and talk via an array of directional microphones and loudspeakers, which keep conversations private. Effectively, it is like meeting up in the town square - except that you might be on different continents.
Given the necessary sponsors and planning permission, Tholos screens twinning London and Vienna could be up and running by the second quarter of next year. There are ambitious plans to expand the system into a network linking at least 16 European cities by 2008, and then others in North America and Asia.
Each Tholos is expected to cost about £1.4 million to build and install. Public access would be free, and running costs paid for by advertising, which will take up 13% of airtime.
http://www.ananova.com/news/story/sm...ews.technology
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MP3 Players
Archos has introduced a pair of portable music players that can be customised to better reflect the user's needs. One of them, the Gmini 220, is the world's smallest player with a 20GB hard drive, Archos claimed.
The Gmini 120 and 220 essentially allow the user to bolt on a series of accessory modules, including a voice recorder (including a built- in microphone), a photo viewer (essentially a memory card adaptor), music composition software and an FM radio receiver. The idea is that buyers can pay for the features they want rather than fork out for functionality they don't need.
Archos is also providing the players with a new icon-based user interface which can be customised too. The UI allows users to manage songs on the device without having to connect it to a host computer.
The Gmini 220 weighs just 170g (6oz), which is actually fractionally more than the 20GB iPod. Archos did not provide other dimensions for the device top back up its 'world's smallest' claim. However, we'll find out when the 220 ships next month.
The Gmini 120 is available today, and apparently contains a 20GB hard drive too, but not as compact a model as the one in the 220. Archos said the difference between the two Gminis is form-factor and screen size. The 220 is smaller and has a 2.5in blue-backlit greyscale LCD. Archos didn't specify the 120's screen size. Both players offer MP3 and WMA recording and playback, and work with Windows and the Mac OS.
The 120 costs $250, the 220 $350. The latter comes with all the available accessory modules bundled - 120 owners will have to buy them separately. The voice recorder costs $20, the 'Photo Wallet' $30, the MadWaves Interactive Music Composer $10 and the FM Remote Control $40.
http://www.theregister.co.uk/content...yer%20 10--22
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Group Contends Record Labels Have Wrong Guy
The Electronic Frontier Foundation asks the music industry to drop its case against a Playa del Rey man who says he doesn't download songs.
Joseph Menn
An online civil rights group has adopted the cause of a Playa del Rey man who believes he has been mistakenly accused of improper file trading by the record industry, setting up a possible showdown over the music business' methods for identifying suspected pirates.
The San Francisco-based Electronic Frontier Foundation on Monday asked lawyers for three record labels to drop their suit against 35-year-old Web site designer Ross Plank, asserting that he is the second target of 261 high-profile suits who is the victim of mistaken identity.
The record companies referred questions to the Record Industry Assn. of America, where a spokeswoman said the trade group was looking into the dispute.
"We're confident in our evidence collection process," RIAA spokeswoman Amanda Collins said. "But to the extent someone claims that we've erred, we will investigate the matter."
More than 50 people sued by RIAA have settled.
Foundation staff attorney Wendy Seltzer said that if the labels do not dismiss the case from U.S. District Court in Los Angeles, her nonprofit group could seek damages to compensate the harried defendant and to learn more about how the labels pick their targets.
"This is a process that needs to be tightened up a lot," Seltzer said.
Plank said his first warning came when his Internet access provider, Comcast Corp., notified him that it had been subpoenaed about his alleged song sharing. Because Plank doesn't use any of the file-swapping networks, he figured it was a mass mailing and threw the notice away.
Weeks later, a reporter called and told him he'd been sued. Plank thought then that someone else could have been using his home-office computer to post songs.
Both Plank and his fiancee use the machine in their business, and Plank has a wireless network that allows his roommate and even neighbors in his condominium complex to get online.
"I'm not someone who does any downloading," Plank said. "I'm planning a wedding; I'm trying to run a business. There's stress enough in life."
At a relative's suggestion, Plank contacted the foundation. The group checked the subpoena that had been issued in the case, which identified a suspect by his Kazaa screen name and Internet protocol address.
Plank said he found out his computer had been using a different Internet address at least since May, before the date cited in the subpoena.
Plank and the foundation said it's unclear whether the record companies had an incorrect IP address or whether Comcast turned over the wrong name.
Comcast spokeswoman Sarah Eder said the Philadelphia cable operator had been "absolutely scrupulous" in making sure it identifies the right customers. "We're going to be looking into it tonight," Eder said.
Comcast also was the provider for 66-year-old Massachusetts sculptor Sarah Ward, whose case was the first known one to be dropped by the record labels since they began suing computer users in September.
Taken together, the cases could open an avenue for defendants to argue that the evidence against them is unreliable, defense attorneys said.
Also, because so many Internet accounts are shared by families or friends, an argument can be made that the person who is paying for access should be served with a subpoena seeking more information, not sued, said Beverly Hills defense attorney Joseph Singleton.
Otherwise, the labels "are making allegations on an insufficient basis, which you're not supposed to do," Singleton said.
Last month, the RIAA said that in future lawsuits it would first notify the targets by letter - potentially minimizing mistakes and increasing the chances of early settlements.
http://www.latimes.com/technology/la...nes-technology
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Journal Is Giving Science Back to the People
Similar publications can cost thousands of dollars, but the Public Library of Science Biology is available online at no charge.
Rosie Mestel
The inaugural issue of a new scientific publication appeared online today, its pages brimming with studies on elephants, biological clocks and thought-controlled robotic arms. Its publishers are hoping it will spark a revolution.
The journal, Public Library of Science Biology, can be read, downloaded and copied free by anyone with Internet access - distinguishing it from the vast majority of scientific journals, which charge annual subscription fees that can run into the thousands of dollars.
Scientists, librarians, charitable foundations and patient groups expressed support for the fledgling publication as an alternative to journals such as Nature and Cell, which charge significant subscription fees. Some journals - such as the organic chemistry publication Tetrahedron Letters, costing $11,000 a year - are a substantial burden for university libraries.
Many view such costs as unfair, complaining that science, generally paid for with public money, should not have to be bought back to be shared.
"The public pays for most of this research one way or another," said Steven Koonin, provost of Caltech and a professor of theoretical physics. "For someone to be locking it up with high prices and copyright restrictions just does not seem right."
California scientist Michael Eisen, a cofounder of PLoS Biology, added: "We're getting a raw deal."
The San Francisco-based, nonprofit Public Library of Science (
www.plos.org) is the brainchild of Nobel laureate Harold E. Varmus, molecular biologist Patrick O. Brown of Stanford University and Eisen, a biology professor at UC Berkeley and scientist at Lawrence Berkeley National Laboratory.
The trio's dream: a world in which the many thousands of scientific journals - from Advances in Internal Medicine to Zoology - are placed in an electronic library open to the public.
Varmus, Brown and Eisen have spent years trying to persuade scientific publishers to make such access possible.
Several years ago, they circulated a letter calling for change, which was signed by over 30,000 scientists. The scientists who signed promised to publish only in journals that provided open access to articles within six months of publication.
Most journals refused to change their practices, and the campaign fizzled. Varmus and his colleagues finally decided the only solution was to publish their own scientific journals.
With a start-up grant of $9 million from the Gordon and Betty Moore Foundation and the Irving A. Hansen Memorial Foundation, they drew up a business plan and hired editors, some wooed from leading for-profit publications.
Today's launch of PLoS Biology will be followed next year by the launch of PLoS Medicine. Eventually, the library will publish a variety of journals covering other areas of science, said Varmus, former chief of the National Institutes of Health.
http://www.latimes.com/technology/la...nes-technology
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Sony Says Profit Tumbled 25% From a Year Ago
Ken Belson
TOKYO - The Sony Corporation's troubles continued last quarter, as its net profit fell 25 percent from the period a year earlier, the company said Thursday. Income from its games division plunged and its movie studio posted a loss.
Sony, the world's second-largest electronics maker, also trimmed by 23 percent its full-year target for operating income, a measure that excludes taxes and one-time events and reflects the core business. The company, which is trying to overhaul its electronics division, left its net profit target unchanged.
The quarterly results were below market expectations and provided more evidence that Japan's premier brand is having trouble keeping its vast entertainment and electronics empire competitive. While Sony has been cutting expenses to meet rivals like Dell, Matsushita Electric and other electronics giants, it has been relying on profits in the game and movie operations to buoy earnings.
But in the quarter ended Sept. 30, the movie division was unable to reproduce last year's record run at the box office. Demand for PlayStation 2 game consoles slipped, while sales of electronics in Sony's most profitable market, the United States, fell 8 percent.
Sony, at least for now, appears to have weathered another more immediate worry - the yen's strength against the dollar - because of improving demand for its cellphones, laptop computers and digital cameras in Japan and Europe. A weaker dollar typically erodes profits when they are converted into yen, but Sony offset those losses with gains against other currencies.
The tepid numbers came just days ahead of Sony's annual strategy session; the results of that will be released on Tuesday. Several reports have surfaced suggesting that Sony will announce plans to cut as much as 10 percent of its work force and phase out some production of slow-selling electronics like its cathode ray tube televisions. Sony is also likely to announce a partnership to produce liquid crystal display panels with Samsung Electronics in South Korea.
The moves, if announced, would help reassure investors that Sony was serious about cutting the size of its work force, selling assets and rejuvenating its product lineup, which is under attack from a variety of competitors. The revamping is needed if Sony is going to more than double its profit margins, to 10 percent, by 2006, as the chairman, Nobuyuki Idei, has promised.
http://www.nytimes.com/2003/10/24/bu...ss/24sony.html
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Ruling a Setback for Crime Database
Baker Says Georgia Law Prohibits Disclosure of Info
WSBTV.com
A much-debated crime database that would gather extensive data on law-abiding citzens has been deemed illegal by Georgia's attorney general.
Attorney General Thurbert Baker decided Monday that the law bans a broad release of driver's license and auto tag information. In a letter to the Georgia Bureau of Investigation, Baker called the database "laudable" for its purpose of preventing terrorism.
But Baker said Georgia law specifically bans the dissemination of "its entire driver information database where there is no particular investigation or active prosecution pending for which the information is sought."
Baker was not making a ruling on the so-called Matrix project. He was writing his legal opinion to the GBI, advising that the law would have to be changed for Matrix to proceed as planned.
Matrix stands for Multistate Anti-Terrorism Information Exchange and was created to track terrorists after the Sept. 11, 2001, attacks on New York and Washington. Florida has used the database for more than a year.
The Matrix database would include: fingerprints, driver's license photos, Social Security numbers, credit information, past addresses and telephone numbers, business associates, speeding tickets, arrests, even marriages and divorces.
Several states that orginally signed on for the database have changed their minds because of privacy concerns.
Former Georgia Rep. Bob Barr, a Republican, is among critics of the database, saying it would violate civil liberties.
GBI Director Vernon Keenan disagrees. In an interview published earlier this month in The Atlanta Journal-Constitution, Keenan called the Matrix database "one-stop shopping" for crime fighters.
State officials disagree on how much Matrix would cost, so it's unclear whether Georgia will proceed. Jim Lientz, Georgia's chief operating officer and a top adviser to Gov. Sonny Perdue, has said he doubts Matrix will be adopted in Georgia unless federal funds bear the entire cost.
Georgia already has contributed criminal and sex offender records to Matrix.
http://www.wsbtv.com/news/2568615/detail.html
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P2P Lives On In A Worldwide Distributed Filesystem
Andy Oram
Back in 2001, if not earlier, companies were marketing filesystems that offered far greater robustness, scalability, and
(perhaps) performance than traditional distributed filesystems such as NFS. OceanStore is probably the best known of these systems, although it is a research project rather than a product.
Now Internet2 is offering such a filesystem across all the dozens of universities that are part of its network. There's even a Windows client! That means Logistical Networking could become the first mass phenomenon in the next generation of distributed filesystems.
The idea of these filesystems is that each file is broken into pieces when stored, and each piece is sent to multiple systems. Encryption protects the data from snooping, and digests protect it from corruption. Never again will you have to stop work because your file server is down; there will always be another server with your data. Downloads experience extra overhead because the locations of the parts have to be resolved, the data could be far away, and the encryption introduces extra work--but breaking large files into pieces can help compensate.
There are so many theoretical advantages for these systems over NFS and CIFS that I am convinced they'll dominate filesystem storage in a few years. Internet2 has taken an excellent step in that direction. It may be the most important illustration of the peer-to-peer concept, far more useful than anonymous distributed systems such as KaZaa.
http://206.191.55.162/MLISTS/news2003/0108.html
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What if Peer to Peer 'Wins'?
Thomas Mennecke
Special Thanks to W. Friedman, AKA Dumwaldo, who wrote this article.
Lets take an honest look at things for a moment here. What is the worst thing that could happen if peer to peer were to eventually overtake the recording industry and bankrupt them all, as the RIAA claims will eventually happen if the current path is not deterred.
So what would happen? Well, music would probably get better as a result. In fact, music would probably improve so much it would eventually be looked back at as a tremendously favorable improvement. If the big business record companies were all eliminated there would be no more music motivated by greed and fortune seeking. The only motivation left to create music would be, well, a love of music.
Most of the music made available by the large recording interests is not art and the creators and performers are not “art”ists. They are part of an industry fueled by a desire for money. From the author and performer of the music all the way down to the guy that empties the garbage pails in the studio and back up to the president of the record company, every single one of those people is doing a job in search of a good paycheck. None of them, performers included, are doing it because of an inner passion that drives them to create. It is not art; it is music that is mass-produced for profit.
The loss of current music continually fed at rapid pace would become overshadowed by the sheer quality of the musical works. Do you really need a new song every week if the 'old' song is not played out in 3 days? Quality music has a lasting quality that keeps it from getting old quickly.
The problem with creating music with longevity is it equals lower sales. Lower sales of course equal lower profits. Recording labels are not in business to bring you art, they are in it for the money and nothing else. Plain and simple, this is capitalism at its finest.
Capitalism and art mix as well as oil and water. I would like to think that years from now music itself will evolve and grow far greater than it is today as a result of the growing free trade of music among a global community. The music industry might eventually fall, but it surely will not stop the music.
If anything, the advent of online file sharing guarantees that we will forever have a supply of fresh music. At no time in history has it ever been as easy as it is now to get music out to masses. No longer does an ARTist have to cow tow to the demanding 'recording industry mafia'. The free trade of music through peer-to-peer services is a godsend to any true artist, but it is a detriment to the purveyors of 'made for profit' recordings that have nothing to do with art. These are the guys getting 'cheated' and not any creator of art. Don’t let the propaganda fool you.
http://www.slyck.com/news.php?story=282
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Can The New Napster Cut It?
Dominic Timms
As anyone who sat through the Matrix Reloaded or any of this summer's selection of Hollywood sequels can attest, producing a follow up that matches the expectations of the original is no easy thing. If it's hard to come up with the goods for a movie that hit box-office gold first time around, then it ought to be nigh on impossible to better a website that revolutionised the way people approached music. That, however, is the intention of a US firm that is bringing back Napster, the ground-breaking site, developed by 19-year-old computer whizz Shawn Fanning in 1999, which made file- sharing a household concept and terrified the music industry. Complete with its infamous feline logo and a record industry that pummelled the original into legal oblivion two years ago firmly behind it, the cat, as they say, is back.
"Napster invented online music. With Napster 2.0 we are in the process of re-inventing it, says Chris Gorog, chairman and chief executive of Roxio, the company that bought the Napster name and technology patents for $5m (£3m) last November. At a glitzy presentation in New York last week, Gorog described the service as "the largest digital music store in the world, with the deepest, richest music catalogue ever assembled, featuring well over 500,000 songs, all available to you at the click of a mouse."
With Napster 2.0 the big difference is that users pay, unlike the original which gave users access to virtually any copyrighted song for free. At a base level it operates much like an online store where users can search, buy, download or burn music to CD for 99 cents a track or $9.95 an album. Tracks can also be transferred to a portable digital player, such as the Samsung Napster player also unveiled at the launch. This $299 device stores music like a traditional MP3 player but also acts as a wireless player which can link up to existing devices such as car and home stereos.
In an attempt to replicate what Napster president Mike Bebel calls "the central P2P [peer to peer] vision of Shawn Fanning", Roxio has developed a second, more comprehensive layer to Napster 2.0, which comes courtesy of a $9.95 monthly subscription. This opens up all the half million or so songs to more or less unrestricted use and also offers users email, customisable internet radio stations - you can even have one tailored to your own tastes - and the ability to send play-lists to non-Napster members. Once they receive your email they can listen to 30-second clips of songs before deciding whether to buy them. All users get a free interactive magazine and an archive of the Billboard charts.
Definitely more polished than the original and with the cachet of one of the best-known brands on the internet, you'd expect Napster 2.0 to do well. But it will face stiff competition from Apple's iTunes, which is set to radically expand its user base with a Windows version before Christmas, as well as an additional fight from services such as MusicMatch, Rhapsody, eMusic and MusicNow. Further down the road more intense competition will come from Sony when its new online music service starts next year.
But the real battle Napster has on its hands isn't fighting price pressures and protecting wafer-thin margins on 99 cent downloads from legal rivals. The key issue for Napster and the other bona fide operations is: can they persuade users of so- called illegal but free alternatives such as Kazaa, Morpheus, iMove, Bearshare and newer operators, such as Suprnova and Earthstation V to switch to paid-for sites?
Not if you believe many of today's file-sharing generation who clog message boards and news groups with assertions that music buying is dead. "The era of paying for music is over. People are already getting used to the idea of music and movies being free through P2P services. Sure, you might get a better experience if you buy the album with its art and CD- quality sound, and seeing a film in the theatre is a much more enjoyable experience, but these new legal services don't offer anything that P2P doesn't," is one typical music downloader's take.
Efforts by groups such as the Recording Industry Association of America (RIAA) to close free networks such as Grockster, Kazaa, and the Israeli P2P network iMesh are still stuck in legal limbo. A definitive conclusion in the US supreme court could still be years away.
The RIAA's subsequent change of tack to go after individual file-sharers is also in danger of backfiring. Last month anti- RIAA campaigners took to the streets after a 12-year-old girl was fined $2,000, while last week another lobby organisation, StopRIAAlawsuits.com, said it had signed about 50 websites to a week-long boycott to coincide with the next round of individual lawsuits due this week.
Even analysts suggest a wholesale switch from illegal file- sharing to legitimate music services is a remote prospect. "Legal music sites lag P2P equivalents for the simple reason that most online users don't want to pay. They're wedded to the idea of free music and can't see the value of legal sites," says Tom Ewing, European market analyst for Nielsen Netratings.
A survey from Informa Media suggests that while internet music revenues will rise from $1.1bn in 2002 to reach $3.9bn in 2008, only $1.8bn of that will come from subscriptions and downloads, with the rest made up of CDs bought online. Meanwhile the value of sales lost to illegal internet services will nearly double to $4.7bn over the next five years.
The report's author, senior Informa analyst Simon Dyson, says: "The determination of the P2P community to develop services that allow users to share music anonymously will keep a lid on any attempts to develop a legitimate download sector. There is a determination in their ranks to be part of the long-term future. Even if the RIAA wins the ongoing court case in the US it's not a certainty that that's going to stop people exchanging files."
Part of this determination can be seen in moves by established P2P networks, such as Kazaa, to make tracking users' downloads more difficult. Newer entrants, such as the Palestinian-based Earthstation V and Russian outfit suprnova.com - which has Tarantino's latest Kill Bill Vol 1 available, in addition to a large catalogue of music - are launching services where anonymity takes precedence over virtually anything else. It is this combination of discretion, a free service and the reluctance of the big five record companies to license services such as Napster and iTunes outside the US that is helping to drive the popularity of illegal file-sharing services.
But evidence from Nielsen suggests the combined effect of punitive legal action by the RIAA in the US and the launch of legal alternatives could be starting to bite. Kazaa, which peaked at 15.1 million US users in March, fell to 9.36 million users last month, while Grockster dropped from a February high of 785,000 users to 219,000 in the same period. "You can't say for certain if users have stopped illegal file sharing or just moved on to other smaller networks but it does look like the RIAA's legal moves are starting to have an impact," says Ewing.
If that scenario continues then there's little reason to suggest that Napster 2.0 can share some of the $1.8bn market that Informa predicts online music services will generate by 2008. But with free alternatives springing up in the same way they did after the original Napster was shut down, not to mention competition from Apple and Sony, the going is likely to be tough. Even with Shawn Fanning as a consultant, it's hard to shake the feeling that it will be the ground-breaking nerve of the original Napster that'll stick longer in the hearts and minds of music fans, rather than the altogether slicker sequel.
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`You Can't Stop The Kids Sharing Files'
In response to claims by the music industry that the sharing of digital music or MP3 files by peer-to-peer (P2P) technology infringes their copyrights and deprives them of royalty fees, the Intellectual Property Office announced recently that the Internet was to be the next battlefront in the war against piracy. Taipei Times staff reporter Bill Heaney talked to James Chen, chief executive officer of Kuro.com.tw -- the developers of Taiwan's largest file-sharing community with 500,000 users -- to find out what all the fuss is about
Taipei Times: The music industry claims that peer-to-peer music file sharing infringes their copyrights and is already suing three local P2P enthusiasts. The industry claims that your Web site encourages people to break the law. How do you respond to those charges?
James Chen: People who understand technology wouldn't say that. Our business is a legal business. Subscribers to our site pay for our software and services.
Of course the music labels have their reasons for making these claims. One of these is that revenues from CDs have been very bad and decreasing for the past few years. Between five and 10 years ago the Internet was not as widespread as it is now. I already realized at that time that sales of CDs were down. The most important reason is that consumer entertainment patterns changed. Previously, young people could only go to a record store or a bookstore. But Taiwan's entertainment venues increased at that time.
Now we could go to pubs, discos, Internet cafes - a lot more places, meaning our NT$1,000 had to be divided among many more places. That's the first point. But the second most important point is that technology changed, particularly CD burners. Before the widespread use of the Internet, when a burner cost less than NT$10,000, the music industry was already affected. Now burners cost US$80 to US$100 and are much faster. Both these factors led to the crash of the local music industry. P2P then put more pressure on top of that.
TT: What about the price of CDs? Did that hurt the market?
Chen: I remember cassettes. They cost around NT$170. Why, when content was exactly the same, did CDs cost more than NT$300? The price was almost double for a different delivery package. Consumers didn't have a preference for cassettes or CDs per se, but they realized that CD quality was better. Cassettes slowly disappeared, and now you don't see them anywhere. But by doubling the price, you opened the door to piracy. That's why there are so many pirated disks now.
I've been in the music business a long time - about 15 years - and in that time I've come to realize that today's music industry managers don't understand the big picture. The market can no longer tolerate a controlled channel way of doing business.
In 2000, I discussed music downloads with the managing directors of labels in Asia. At that time they weren't willing to discuss digital music downloads. Their opinion was songs should be packaged in CDs, not sold individually. Now they are slowly realizing that MP3 files can be sold individually, but it's too late as the market has moved way ahead of them yet again.
They have done too little too late. I am sure that within two years, the music labels will be using P2P, but who knows what new technologies or inventions will be around then.
TT: The music industry has approved Apple Computer Inc's iTunes music download Web site which sells each song for US$0.99 of which a portion is royalties. Would you consider following the Apple model?
Chen: I have already discussed this with the music labels. In Taiwan they have no plans to operate this model. The local managing directors also do not have the power to decide this matter. They can only decide for local music content.
I asked them to tell me how they could co-operate with me. If they are not satisfied with my offer of how much to pay them, they should tell me how much would satisfy them. The next problem is how to divide the money, and finally how much copyrighted material we could use, but they didn't reply to me. We had discussions on May 26, June 10 and June 17. The fact that they couldn't come to an agreement with us shows that their aim is not to co-operate with anyone but try to control the market themselves.
Our request is that there is a level playing field where music can be sold as CDs or over the Internet on an equal basis, but their priority is on the CD with the Internet as a secondary channel.
TT: You did offer to charge your subscribers an extra NT$50 on top of their standard monthly fee of NT$99 and pass this on to the music labels, but your offer was rejected as it did not pay royalties on each title every time it was downloaded. Are you going back to the negotiating table with any new offers? If so, what, and if not, why?
Chen: The NT$50 charge we offered was not cast in stone. We came up with that figure from our own market research, but did not rule out a higher charge. But the music companies said it was too low without saying how much would be acceptable.
There are 300 million people in the world sharing music files. Only two companies can collect fees, and they are both Taiwanese -- Kuro and EzPeer. Kuro has proven that we have the capability to collect money from peer-to-peer and we have the intention to co-operate with the labels. That is the major difference. We are sure we can create a new revenue stream, and by doing so we can help the labels convince the other P2P service providers to control their services.
P2P -- which allows computer users to locate and download over the Internet music files from any other computer that shares the same P2P software and is logged onto the Web -- can make the music-listening market grow much bigger. In China, for example, piracy is a huge problem. But if we can agree on revenue sharing with the music industry, we can collect more revenues in China. We have shown that it can work. I am willing to sit down and talk any time, anywhere.
TT: The music industry has requested you stop placing their copyrighted material on your server until you have reached an agreement about licensing. How do you respond to their demand?
Chen: I need to make a clarification here. There are no songs on our server. This shows that the music industry does not understand the technology. We place a list of file names on our site, not files. The files are stored in the users' computers.
The industry needs to accept the power of the Internet as a tool. It used to be it would take up to a year for a new song or singer to reach the far reaches of the market in Taiwan and China through the CD channel. But with the Internet, new music can flow to every part of the market within a few hours.
TT: Will you be investing in new technologies, for example MPEG4 video downloads?
Chen: We have developed a digital multimedia magazine in-house, and we currently have around 60,000 downloads per week of that. We create the content ourselves. We are trying to prove that P2P is a killer application. You probably don't know that your ICQ, Yahoo or Microsoft Instant Messenger has a P2P mechanism inside. Kuro endorses this technology so much. The music application is one of the services we provide. We are developing many more on top of this ? like software and movies. We are ahead of time, much further ahead than the music labels.
But the problem we have at the moment is bandwidth. ADSL in Taiwan is just not fast enough. It is 1.5 megabytes per second. The minimum you need for downloading movie files in 6 megabytes per second.
TT: Recent cases launched by the RIAA in the US and the IFPI here have put music consumers -- and your customers -- in court. Has this hurt your business and how do you react to these tactics?
Chen: Recent changes to the Copyright Law said that if you make less than five copies of a song, or the market value of your copy is less than NT$30,000, you are not breaking the law. Also many users buy a CD and make copies for personal use - that is reasonable. You can't say people can't copy CDs onto their computer. We have lost 10 to 15 percent of our business. But users quickly forget. The behavior model has changed. Users listen to music as MP3 files now, not CDs.
TT: But the changes to Copyright Law also gave rights holders the right to claim royalties for songs that are distributed over the Internet. Doesn't that apply?
Chen: The definition is if you are distributing the song for commercial purposes, so this does not apply to P2P. Users of P2P are not collecting money, they are sharing the file. It is not a business activity.
http://www.taipeitimes.com/News/biz/.../20/2003072683
Until next week,
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js.
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Current Week In Review.
Recent WIRs -
http://www.p2p-zone.com/underground/...threadid=17741 October 18th
http://www.p2p-zone.com/underground/...threadid=17709 October 11th
http://www.p2p-zone.com/underground/...threadid=17666 October 4th
http://www.p2p-zone.com/underground/...threadid=17605 September 29th
Jack Spratts Week In Review is published every Friday. Please submit letters, articles, and press releases in plain text English to jackspratts at lycos.com. Include contact info. Submission deadlines are Wednesdays @ 1700 UTC.