Stop Music Theft

Introduction

The intellectual property ("IP") industries have tried many things to stamp out online piracy. Nothing has really worked all that well. However, we chronicle these attempts, not to be critical, but to lay the groundwork for some critical thinking about how to actually solve the problem.

The IP industries, especially the music business, have been faced with a paradigm shift. Like any paradigm shift, in fact by definition in a paradigm shift, no one has any experience in how to react and what to do¹. So, rather than attack or deride the IP industries, what we hope to accomplish here is study what has not worked as a basis to find out what will work.

Note: We have assigned each of these approaches a letter grade (using the United States academic grading system of "A" through "F" where A is the best and F is failing). This grading process is purely subjective, purely our views, and again, is not meant to castigate the IP industries. It is meant only as a tool to focus attention on what has (or mostly hasn't) worked.

Thus, in more or less chronological order, the different approaches…

Pirate Site Law Suits

In the late 1990's, the music industry became aware of the wholesale theft of music that had started taking place over the internet. The first response was to legally challenge the websites facilitating this theft. So-called "Pirate" websites like Napster, Grokster, and "KaZaA, were serially targeted. The RIAA won these suits and put all of these sites out of business.

Ultimately, despite the continued success of these lawsuits in shutting down the pirate websites, new sites just sprung up to take their place. Thus, the "whack-a-mole" approach largely failed. However, the take down of Napster can be said to have probably had a lot to do with Apple launching iTunes which has been a phenomenal success.

Law Suits Against File Sharers

The RIAA and more recently, the MPAA have brought some 30,000 legal actions against individuals for file sharing. All but a few of these cases have been settled out of court with the accused generally admitting guilt and paying a fine. A few cases have gone to a verdict and some verdicts have been in the multi-million range.

This approach has been largely an unmitigated public relations disaster for the record and movie industries and given the rampant and ever-increasing level of online piracy, it can certainly be persuasively argued that it is not working to deter piracy.

Digital Rights Management

Digital rights management or "DRM" is the process of encoding or formatting IP in a digital format so that it can only be played or seen or interacted (or copied) with or on on a certain device or after being unlocked with a digital key. In its most draconian form, it might require a hardware dongle being attached to one's computer (like the Pro Tools recording software for instance). Or, in the case of some CDs Sony issued a few years ago, a special code might be embedded in the CD.

Today, most movies in fact have a form of DRM that is designed to block the user from making copies.

Arguments about DRM have raged for years. Apple's iTunes originally had DRM which was probably necessary for the record companies to have ever agreed to license their works to Apple. More recently, Apple has "talked" the record companies into dropping DRM. Apple's argument was in part—there was no DRM on CDs so all of the content is on the net anyway. Why penalize someone who actually buys a song from being able to make copies for all of the different devices they want to play it on?

So, a chief argument against DRM is Apple's argument which is that DRM "degrades" the consumer's experience.

Another major argument is that any DRM that smart people can come up with can be defeated by equally smart people and this has in fact proved to be the case time and time again.

So, DRM is working in the case of movies and software to some degree to reduce piracy, but for music, it has been a total bust.

DMCA/Takedown Notices

The "Digital Millenium Copyright Act" or "DMCA" was passed into law in the US in 1998. For purposes of this discussion, it did two principal things:

• Created a safe harbor from liability for IP piracy that took place over the systems of internet service providers ("ISPs")—the companies like Cox and Comcast, AT&T and Verison, etc. that provide internet service/connections.
• Provided a system of "take down" notices wherein copyright holders could essentially order website operators (like Youtube or Myspace, etc.) to remove unlicensed intellectual property from their sites.

It was designed in part to address the deficiencies of the US Copyright Act of 1976 with regard to online IP piracy. In our view, it has largely failed to fix the prior law or stop online piracy. Certainly something is better than nothing and the take down notice part of the law has resulted in a lot of infringing content being removed from "responsible" websites like Youtube and Myspace. It has even caused sites like this to either develop (in the case of Youtube) or purchase (in the case of Myspace), services that screen every upload to their sites and match them against a database of known copyrights to effectively block the uploading of potentially infringing IP.

However, the take down notices have been wholly feckless in dealing with the "irresponsible" website operators. Or, put another way, the "pirates" running these web sites (see more info on them here, here , and here), use the take down notice as a defense—they say they will comply and either they don't or they know that the law is so impractical, that it's not worth the paper it's written on.

Why is the law impractical? Because there are millions upon millions of copyrights and thousands of pirates. How are the copyright holders to monitor all of these websites? How is it economic for a copyright holder that might make $25,000 off their song to chase that song across the internet? That $25,000 is critical to the copyright holder—the songwriter or publisher or artist—but it would all get eaten up by the cost of tracking the infringing activity across the net and sending out and following up on all of the take down notices.

Th other key aspect of the DMCA—granting immunity to the ISPs—was a critical and almost "criminal" error in our view. It lets off the hook the one player in all of this that has historically benefited dramatically from piracy and is in the most ideal position to interdict it.

How have the ISPs benefited from online piracy? That's easy. ISPs, especially the cable operators, have increased their system speed (broadband) over the years and advertised the speed increases as conducive to broadband activities like downloading. Customers flocked to faster internet connections from dial up and even slower DSL in part because it facilitated illegal file sharing.

Why are the ISPs in the best position to stop online piracy? Because every illegal upload and download has to go through an ISPs equipment.

The IP industries have realized the error of their ways (in supporting the DMCA "immunity" provisions) and now are reversing field. (Click here to see the recent Joint Filing by the RIAA, MPAA, et. al. Note: the link is to a PDF version of the filing). This filing also discusses our first point as to take down notice shortcomings as an effective deterrent to rampant online piracy.

Bottom line, the DMCA has done little to stop rampant IP theft.

The "Higher Education Opportunity Act" of 2008

In 2008, the "HEOA" was passed. It updated an earlier 1968 bill and added a number of provisions concerning on-campus online piracy. Colleges and universities are considered to be hotbeds of such activity and as these institutions generally own and run their own internet networks (i.e.,they are the ISPs on campus), they are in an ideal position to be held accountable for and do something about online IP theft.

The Future

It looks like the next attempt by the music industry is shaping up to be the so-called "Three Strikes and You're Out" approach. Also, called "graduated response," France has implemented "Thee Strikes," the U.K. just passed it into law, and New Zealand is close to getting it through its legislature. We have major reservations about "Three Strikes" and they are set forth here.

We believe ultimately, "Three Strikes" will be a colossal failure. Moreover, the fight to get it passed will exhaust energy and goodwill that the IP industries could better use to put into place a real solution (which we set forth here.) We will say however, something is better than nothing and "Three Strikes" is an improvement over the law suit strategy the RIAA and MPAA have pursued against individual file sharers. It is better simply because it bypasses the steps necessary to identify an illegal file sharer under current laws in most jurisdictions. In fact, it really is a substitution for litigation. It provides that an infringed party can demand an ISP take action against an alleged illegal file sharer without the infringed party having to prove that infringement in a court of law (at least in the initial steps in the graduated response.)

Nonetheless, despite its positive aspects, were we to rate "Three Strikes," it would be…