The
Evolution of Online Piracy of Music
Alexis Nadolny
George Jong
Melinda Berger
November 20, 2001
Online piracy of music has been and continues to be a huge problem for the music industry. In the past few years there has been a marked increase of music piracy mostly due to new technologies that facilitate the downloading and sharing of music. Motion Picture Expert Group-1/Level 3 (MP3) is a type of technology that has aided and perhaps enhanced the act of music piracy.[1] As the piracy increased, the music industry, specifically the Recording Industry Association of America (RIAA), became concerned with copyright violations which ultimately lead to losses of revenue. Naturally the RIAA and the founders of the music sharing technologies became entangled in massive litigation that eventually involved the Supreme Court[2]. The main technological player, Napster, suffered a huge setback when they were deemed in violation of copyright laws[3]. Although a huge win for the record industry, new technologies were soon developed and piracy of music continues to remain strong. As the battle keeps evolving, we can look forward to more litigation and newer technologies from both the record industry and the music sharing program companies.
The
beginning of the digital download revolution ….
MP3s are highly compressed music files that make it much easier to download and transfer music from one computer to another. One of the greatest aspects of MP3 files is that they have a high compression rate; what this means is that the files are very small in comparison to other formats. An example of this would be that an audio or .wav file of a CD track might be 30mb or more, while an MP3 file of the same track might total around 3mb. The impact that this has on downloading time is that it shortens it drastically. The quality of MP3 files is superior to most other file formats because of their high compression rate. When compared to other types of files such as RealAudio, the listener finds that the MP3 is a clearly better quality. MP3 files are as close CD quality as we are able to currently achieve. When compared directly to CDs MP3 files have been found to sound slightly hollow, but they sound much closer to the CD version than other digital formats. The high compression ratio of MP3s allows music files to be a more manageable size and gives the capability to download over the Internet. The small size of an MP3 file has allowed people to place entire CDs onto the Internet; it has also allowed for thousands of web-surfers to download them for free. Web-surfers are in essence "stealing" copyrighted music in mass quantity when they download MP3 files off of the Internet.[4] There are many legal issues and legal cases involving MP3 files as well as programs such as Napster, which facilitate the transfer of illegal music files between computer users.
Napster is a software program, which allows its users to locate and share MP3 files; it is now being regarded as the company that precipitated the digital download revolution. Shawn Fanning created Napster in 1999 while a freshman at Northeastern University. The Napster software was an effort on Fanning’s part to learn Windows-based programming as well as attempting to fill his roommate’s desire for an easy way to find music on the Internet. He envisioned an easy and practical way for people to share their personal music collections with other like-minded fans online. Fanning quickly became consumed with writing the code for the Napster software and left school after only one semester. In May of 1999, Napster, Inc. was incorporated and shortly thereafter the company was moved to Northern California. Napster technology incorporates a centralized or server-based Peer-to-Peer (P2P) network. Centralized Peer-to-Peer computing is a very efficient way of linking computers so they can share data or processing power is via client-server architecture. Servers store data and applications that PCs can access. With a server-based network, there is a central list of information that is accessed by all the users of the system. When a new user joins the network, the Napster software searches for music files on their computer. As they go online to search for music, the software publishes their music collection on the central network. While the user searches for music on the network, others can download files directly from their machine. Likewise, when the new user selects music files on the network that they want to download, their software asks the Napster software on the other end of the line to upload the file directly to them. The locations of all the music files of the users that are currently on-line are kept on the central network, but the files themselves stay on the users’ computers until another computer asks for it.[5] Under the Napster program there is no process for checking to see if the materials distributed are protected by copyright, nor does the system recognize the true identity of the users involved in the transaction.[6] Music companies are outraged at the advances in technological theft that are occurring; they argue that materials transferred through Napster and other similar programs fall under copyright. The transfer and copy of songs using this type of program constitutes infringement.[7]
Legal ramifications of file sharing technology….
Intellectual Property consists of patents, copyrights, trademarks, and trade secrets, which are legally protected rights; they are also a major component of intellectual capital.[8] Copyright is one type of intellectual property and it prohibits the unauthorized duplication, performance, or distribution of creative works. To have a copyright means that the law protects some expression of thought that is fixed in a tangible medium. Courts recognize that this law as a property right and see copyright infringement as trespassing on the copyright. Copyright protects against infringement in literary, pictorial, graphic and architectural works as well as motion pictures and other audiovisual works including musical works and accompanying words. Registering a copyright gives prima facie evidence of copyright; an artist must submit an application to the Copyright Office, two copies of the work, and a small fee to be considered. There is a code set out in vast detail to explain how the Copyright Office determines whether or not an owner should obtain copyright on their work. There are six “exclusive rights” of copyright:
These “bundle of rights” protect and preserve the economic interests of copyright owners.
Theft of intellectual property is rampant on the Internet. The music business and its artists are the biggest victims. Millions of people pirate music online every day; because of the nature of the theft, the damage is difficult to calculate and millions of dollars are at stake. Unauthorized Internet music archive sites, using multiple formats such as .wav files or MP3 files, provide illegal sound recordings online to anyone with a personal computer. Music can be downloaded and played indefinitely without the authorization or compensation of the artist and record company. Other music pirates use the Internet to peddle illegal CDs that they have burned.[10]
The Recording Industry Association of America is the trade group that represents the United States recording industry. Their mission is to foster a business and legal environment that supports and promotes its members creative and financial vitality. Members are the artists and record companies that comprise the most vibrant national music industry in the world. RIAA members create, manufacture, and distribute approximately 90% of all legitimate sound recordings produced and sold in the U.S. Annual revenue for recorded music in the United States is $14 billion; worldwide it's $38 billion. The RIAA claims that $5 billion in annual revenue is lost to piracy, only accounting for what is passed around on compact disc or tape. No one knows yet what MP3s and file sharing will cost in lost revenue.[11] In support of their mission, the RIAA works to protect the Intellectual Property Rights of its members and the First Amendment rights of artists. They also conduct consumer, industry, and technological research as well as monitoring and reviewing sate and federal laws, regulations, and policies.[12] The RIAA is intent on fostering a viable music marketplace online, preventing piracy, and fighting censorship all based on one premise: It all states with the music and the music starts with the artist. The artist creates the music that marks key moments and memories in a person’s life. Music moves and unites people; it is expansive, evocative, poignant, or powerful. That’s why, around the globe, the artist is embraced, honored, banned and sometimes feared. Nothing communicates like music does. To do his or her best, the artist needs a supportive environment. That is a goal of the RIAA. The RIAA fights to preserve freedom of speech, copyright protection, and a positive environment in which to create and distribute music-- on and off the Internet.[13]
As a result of the RIAA’s stance on the sharing of MP3 files, legal pursuit was taken. On July 26, 2000, the Honorable Marilyn Hall Patel, the chief judge of the United States District Court in the Northern District of California heard the case of A&M Records, Inc, A Corporation; Et Al., vs. Napster, Inc., A Corporation.[14] The prosecution made the following statement to convey the severity of the situation:
“…14,000 recordings are downloaded a minute using the Napster system. If we are here for, let’s say three hours, 2,520,000 recordings will have been downloaded. That’s 20 million a day. Those are not only our figures, your Honor. Those are Napster’s figures. They say between 12 and 30 million a day…and 90% of those, your Honor, are copyrighted recordings.”[15]
The RIAA decided to sue Napster because there are no royalties being provided to their clients. They argue,
“No royalties are paid to anyone. The artist whose work goes into this, the music publishers and writers, musicians, labor unions, the retailers, other online distributors, my clients, our clients, the record companies get—not only get no return on their investment, but the Napster service and system is piggybacking on our clients’ investment in the manufacture and creation of those recordings, the promotional costs, the advertising, all of which go into making a Napster user want to download our recordings.”[16]
The prosecution wants Napster to be required to obtain permission before the recordings are able to be downloaded off of their system.[17]
In defense, Napster representative, Daniel Johnson Jr., argues that it is impossible to sort by word in Napster due to the way the program is set up.[18] He also states that Napster has complied with the DMCA and despite the impracticality of being able to know when copyrighted material is being accessed, Napster has attempted to inhibit those downloads. He argues,
“Napster has complied with the DMCA. If it receives notice of the existence of infringing material, it pursues the appropriate course of conduct, which is to identify once a person is online. Because remember now, this is not a static situation. If a person is not online, Napster can do nothing. But if a person is online and it is determined that that person, after having received notice, has in fact been—does, in fact, have the copyrighted material, that person’s hard drive is disabled. That’s what we did.”[19]
Napster further defends itself by explaining that MP3s are a development of Sony, one of the record companies, and that new technology has been developed and will be used on future compact discs to prevent programs such as Napster to allow file sharing.[20] Mr. Johnson also explains to the judge that you can not destroy the MP3s that already exist and those that are out there now, will always be free.[21]
The Honorable Marilyn Hall Patel decided against Napster, Inc. and in favor of A&M Records, Inc. The judge determined that Napster was “…facilitating something that involves the infringing upon plaintiffs’ copyrighted works...”[22] Napster appealed and was denied. The Ninth Circuit Court of Appeals concocted a new test to determine if third parties can be held liable for contributory infringement regarding the issue of file-sharing.[23] “According to the court, contributory liability may potentially be imposed to a file-sharing technology provider who:
1. receives reasonable knowledge of specific infringing files;
2. knows or should know that such files are available on the system; and
3. fails to act to prevent viral distribution of the works.”[24]
The Napster trial was the first of its kind and will most likely become a precedent for future court proceedings. The outcome of the A&M Records, Inc. vs. Napster, Inc. has sparked more legal proceedings concerning specific music groups and corporations prosecuting Napster, Inc. and individuals guilty of downloading music from Napster and similar programs.
On April 13, 2000, the music group Metallica filed suit against Napster and three universities for copyright infringement and racketeering.[25] The three universities are the University of Southern California, Yale University, and Indiana University. The RIAA had sent notices to the schools to explain the copyright violations that were occurring.[26] One week after this suit was filed, the rap artist known as Dr. Dre gave Napster a deadline to remove his songs from the program.[27] Both Metallica and Dr. Dre gave Napster lists of names of people who had illegally downloaded their music from the program. They demanded these people be removed from the service and directly threatened their fans with litigation.[28] As stated in the Annual Review of Law and Technology, “…These cases reflect the courts’ continuing struggle to protect the rights of creators of digital information without unduly interfering with public access to and use of that content…”[29]
The result of the RIAA and Napster trial has also led to more threats of litigation from the RIAA concerning CD manufacturers. The RIAA instituted new guidelines and threatened that if they were not followed, legal action would follow. These guidelines included the verification that all “recorded material had been “cleared” or licensed by the copyright owners.” These guidelines are much stricter than those previously issued and are under strong surveillance from the RIAA.[30]
Napster’s
successors….
Because Napster is a centralized peer to peer network (Fig. 1), it made it easier for the courts to place blame on the company for contributing to illegal file downloading. Newer technologies such as Gnutella and FastTrack are decentralized networks (Fig. 2) where each peer connects directly to other peers without being directed by a server. These connections are repeated making the resulting network, in theory, infinitely large. In reality this size of a network is constrained by the number of layers of computers a message has to travel through.[31] Likewise, Gnutella and FastTrack do not maintain a central content index and are not subject to content filtering. They also provide support for the full gamut of audio, video, image, document, and software files.[32]

Fig. 1. Centralized Network[33]

Fig. 2. Decentralized Network[34]
To use these networks freely, software such as BearShare and LimeWire can be downloaded for the Gnutella network and Morpheus and KaZaA can be likewise downloaded for the FastTrack network. Each type of software differs slightly in functionality. As of now, Morpheus has the upper hand with respect to ease of use. It offers technology such as Meta Data and SmartStream. Meta Data such as ID3 tags for mp3 files, is automatically extracted from files you share and made searchable, which makes for much more accurate searches. This allows for album, title, artist, category, resolution, author, length, and more to be included in searches. In SmartStream, files are automatically downloaded from the fastest connections, failed transfers are automatically resumed, and perhaps the move impressive, files are even being downloaded from several sources simultaneously to speed up the download. Search results are automatically grouped together in cases of multiple instances of a file. Also unlike the Gnutella programs, the speed of Morpheus’ query engine rivals that of centralized systems like Napster. Perhaps this is why Morpheus has eclipsed its rivals in number of users proving that after Napster the beat still goes on.[35]
New technologies, such as the above mentioned, which have been developed in the wake of Napster’s legal disputes, are also facing serious litigation. On Wednesday, October 3, 2001, the RIAA and the Motion Picture Association of America (MPAA) have banded together to prosecute MusicCity, KaZaA and Grokster on the grounds of copyright infringement. The new lawsuit is very promising for the prosecution because of the previous advances they have made. Scour, another file-sharing network, has been shut down, trades on Napster have been stopped, and Aimster is having financial difficulties.[36] The difference with this litigation in comparison with the Napster suit is that this FastTrack software is much more difficult to control. The RIAA and the MPAA are “asking for preliminary injunctions to enjoin the defendants’ activities. They are also requesting the defendants’ profits, and a damage reward decided upon by the court, or alternatively, maximum statutory damages of no less than $150,000 per individual copyright infringement.”[37] It is suspected that the matter will be settled out of court.[38]
The future of litigation over music piracy is predicted to concern the issues of copyright, fair use, privacy, antitrust, and so forth. A recently introduced piece of legislation, the MP3.com bill, deals with the concept that “…someone can aggregate other peoples’ copyrighted works into a database and sell access for commercial gain without paying licensing fees…”[39] Broadcasters will also probably be involved in litigation on copyright issues. These radio stations will play an important role because unlike the music industry which is mostly concentrated in New York, Nashville, and Los Angeles, the broadcasters are all over the country and consequently have a stronger impact on the political processes in their districts. This will most likely result in the discontinuance of many of their radio practices such as playing entire albums on the air, and also in the compliance of radio stations in new rules and fees for broadcasting their radio stations on the internet.[40] The privacy issue will also be very relevant and controversial. We will almost certainly see restrictions on the transferring of marketing information such as what music customers like and how often they listen to music. Antitrust issues will in all likelihood revolve around new obligatory charges and who will be administering them. They will also involve the review of industry structures.[41] Many things will most likely be met with strong opinions on both sides of the issue, but the new legislations and litigations are essential to providing and developing the boundaries of the World Wide Web.
Music industry fights back with its own technology….
In addition to legal pursuits, the music industry is seeking help from companies who develop encryption technologies for digital media files. These technologies are called Digital Rights Management (DRM).[42] One of the major players involved is Microsoft. Microsoft’s DRM software allows a content owner, such as a record label, to set rules on how the content can be used. For example, the owner could restrict the time period or number of times a downloaded song can be played, as well as the capability of the song to be transferred by a listener to an MP3 player or a recordable CD. The software protection system is fully imbedded into Microsoft’s Windows Media file format, and would only work if record companies distributed their music through this format. On top of helping the music industry against piracy, implementation of Microsoft’s DRM would make the company a major force in the industry since all the files would be in Windows Media format.[43]
Another DRM technology is the Secure Digital Music Initiative (SDMI), which was originally created by the major music labels to develop a secure system of content delivery. Eventually over 200 hardware, software, and content companies got involved in the process and after two years of proposals, meetings, and controversy, SDMI is nearly ready for the market. SDMI is the music industry's response to the challenges posed by the digitalization of music. Its goal is to have most, if not all, compact discs SDMI-compliant, meaning that each song will have a "watermark" embedded in it. This watermark will govern how a song may be copied and played and whatever fees that may be incurred when songs are copied to a computer.[44]
Of course these technologies have yet to be fully implemented and already are facing many obstacles. One of them is hackers. For example, a piece of software being distributed anonymously online has successfully cracked part of Microsoft's anti-piracy technology. Microsoft confirmed the software code, written by a programmer using the pseudonym "Beale Screamer," can strip off the protections that prevent a song from being copied an unlimited amount of times.[45] However, Microsoft deems the damage to the overall security of its software to be slight because the company has built in a means to updates the protection for instances such as this. "We have been forthright that no technology and no DRM is 100 percent secure," said Group Project Manager Jonathan Usher.[46] As a result of “Beale Screamer’s” program, hackers in Hong Kong are routinely breaking Microsoft's digital media copyright protection system and helping themselves to broadband encrypted content, including games, films and music videos. The hackers recorded the encrypted streams onto disk and then broke the protection.[47] It is critical for Microsoft and the music industry that its DRM software remain trusted, or at least secure enough to bar the vast majority of people from breaking through.[48] Unfortunately, it seems that any encryption someone can build, someone else can break.
Although the SMDI technology has not yet been hacked, it has other many other problems. SDMI does not allow the playing of existing MP3 files on SDMI-compliant players. Consumers will find this unacceptable because they already have music libraries to which they listen. SDMI may also be difficult for consumers to understand and use. People do not want to have to keep track of their copying or have their consumer rights altered by SDMI’s limits.[49] In the event SDMI could overcome some of these obstacles, the most prolific obstacle, hacking, probably can never be conquered. Once the code is revealed for any type of encryption, the encryption immediately becomes compromised until changes are made to it. To make matters worse for anti-piracy advocates such as the music industry, the appeals court recently released a decision overturning an earlier order that barred hundreds of people from publishing the code for a software program called "DeCSS" online. The appellate judges argued that posting the code is just like publishing other types of controversial speech and is protected by the constitution.[50]
In
Conclusion….
The battle between the music industry and companies that develop new technologies to facilitate the downloading and sharing of music will inevitably continue into the foreseeable future. As long as the technology is out there to make possible the illegal sharing of copyrighted music files, individuals will take advantage of it. Individuals are encouraged by the ease and lack of accountability when using file-sharing software and until this changes, they will continue to pirate online music. Presently, decentralized networks such as Gnutella and FastTrack appear to hold the upper hand as musical file-sharing is as strong as ever; however, the implementation of encryption technologies or setbacks through litigation could greatly change the landscape of online piracy. Only time will tell what develops since the battle continues to produce unprecedented problems. What we can expect is the development of newer technologies from both sides along with further litigation and legislation.
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[1] The Economist v.351 no9118, “The Big Five Hit the Web. Music Companies to Sell Music Over the Internet.” Pages 63-4. 8 May 1999.
[2] Harris, Ron, The Nando Times, “Technology: Copyright laws at stake in Napster case.” http://archive.nandotimes.com/technology/story/0,1643,500458967-500698582-503788773-0,00.html (Date modified: 2 March 2001; Date visited: 5 October 2001.)
[3] Barrow, Edward, “Napster Loses On Appeal.” http://www.platopress.co.uk/copyright/news/napster00.htm (Date modified: 12 February 2001; Date visited: 5 October 2001.)
[4] Rubak, Josh, “MP3’s and Hacks Are Good For Business.” http://www.rubak.com/article.cfm?ID=7 (Copyright: 2000; Date visited: 18 November 2001.)
[5] Shirky, Clay, O’Reilly P2P, “What Is P2P… and What Isn’t?” http://www.openp2p.com/pub/a/p2p/2000/11/24/shirky1-whatisp2p.html (Date modified: 24 November 2000; Date visited: 16 November 2001.)
[6]
Poquette, Bruce R., “Current Public Law and Policy Issues:
Information Wants to be Free.”
22, Hamline Journal of Public Law & Policy, 175 (2000). http://www.lexis_nexis.com/universe
(Copyright: 2000; Date
visited: 18 November 2001.)
[7]
Poquette, Bruce R., “Current Public Law and Policy Issues:
Information Wants to be Free.”
22, Hamline Journal of Public Law & Policy, 175 (2000). http://www.lexis_nexis.com/universe
(Copyright: 2000; Date
visited: 18 November 2001.)
[8] “Techniques to Turn Intellectual Property Into More Profitable Assets.” Journal of Accountancy. September 2001, Vol. 192 Issue 3, p20 at MdUSA Web, http://mdusa.lib.umd.edu/ (Date viewed: November 18, 2001.)
[9] Poquette, Bruce R.,
“Current Public Law and Policy Issues: Information Wants to be Free.”
22, Hamline Journal of Public Law & Policy, 175 (2000).
http://www.lexis_nexis.com/universe
(Copyright: 2000; Date
visited: 18 November 2001.)
[10] Recording Industry Association of America, “Anti-piracy: Online Piracy -- Introduction.” Paragraphs 1-3, http://www.riaa.com/Protect-Online-1.cfm (Date viewed: 18 November 2001.)
[11] Tadjer, Rivka, CMP Media LLC, “Music Establishment Prevails—For Now.” http://www.internetwk.com/transform/transform052900_2.htm (Date modified: 29 May 2000; Date visited: 19 November 2001.)
[12] Recording Industry Association of America, “About Us: Who We Are -- Mission Statement.” Paragraphs 1-2, http://www.riaa.com/About-Who.cfm (Date viewed: 18 November 2001)
[13] Recording Industry Association of America, “Artists: Artists Lending Their Voices -- Its All About the Music.” Paragraphs 1-6, http://www.riaa.com/Artists-Voices-1.cfm (Date viewed: 18 November 2001.)
[14] A&M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896 (N.D. Cal. 2000). Pages 1-2. http://www.riaa.org/PDF/NapsterPatel.pdf (Not modified; Date visited: 4 November 2001.)
[15] A&M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896 (N.D. Cal. 2000). Page 6, lines 13-24. http://www.riaa.org/PDF/NapsterPatel.pdf (Not modified; Date visited: 4 November 2001.)pg 6, line 13-24
[16] A&M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896 (N.D. Cal. 2000). Page 8, lines 2-10. http://www.riaa.org/PDF/NapsterPatel.pdf (Not modified; Date visited: 4 November 2001.)
[17] A&M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896 (N.D. Cal. 2000). Page17, lines1-8. http://www.riaa.org/PDF/NapsterPatel.pdf (Not modified; Date visited: 4 November 2001.)
[18] A&M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896 (N.D. Cal. 2000). Page42, lines 2-3. http://www.riaa.org/PDF/NapsterPatel.pdf (Not modified; Date visited: 4 November 2001.)
[19]A&M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896 (N.D. Cal. 2000). Page42, lines 9-18. http://www.riaa.org/PDF/NapsterPatel.pdf (Not modified; Date visited: 4 November 2001.)
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