Policy Debate: Should Napster and similar MP3 distribution mechanisms be banned?
Issues and Background
In the new e-commerce economy, hyper speed and
continuous change are the rule. The result is that the
purchase and ownership of CDs, or for that matter, any
other fixed product, makes less and less sense. Why would
anyone want to acquire or hold on to anything when
everything is immediately accessible and updatable in vast
commercial networks, right at the time where you need it
and is cheaper to access that material than to buy it? That’s
why Napster is such a success. It provides instant access to
music at near zero cost.
Jeremy Rifkin, "Napster heralds new business model," August 28, 2000, MSNBC
I don't have a problem with any artist voluntarily distributing his or her songs
through any means the artist elects-- at no cost to the consumer, if that's what
the artist wants. But just like a carpenter who crafts a table gets to decide
whether to keep it, sell it or give it away , shouldn't we have the same options?
My band authored the music which is Napster's lifeblood. We should decide what
happens to it, not Napster -- a company with no rights in our recordings, which
never invested a penny in Metallica's music or had anything to do with its
creation. The choice has been taken away from us.
~Lars
Ulrich, July 11, 2000 statement before the Senate Judiciary Committee
For decades, individuals have made tape recordings of live musical performances or musical
performances sold on records, tapes, or CDs. These recordings were often copied and traded with
friends and other collectors. Taped copies, however, were of a lower quality than the original.
Subsequent copies suffered further quality loss. This reduced the possibility for widespread
tape copying of music files as an alternative to purchasing music from recording companies.
The introduction of the MP3 recording format, however, made it possible to encode and compress
musical recordings into a compact file that can be played back at near-CD quality. Due to the
digital nature of this recording, each copy of the MP3 file is identical to the original file.
These files are small enough that they can be quickly downloaded from the internet, even by
those using modem connections. The development of MP3 players that can store hundreds of songs
has also encouraged the widespread use of this storage format.
In January 1999, Shawn Fanning, a freshman at Northeastern University, introduced the Napster
program and service. Napster allowed users to swap music files (stored in MP3 format) with other
users of this service. The Napster company provided the software that locates
and downloads MP3 files and maintained a central directory containing the addresses of computers
that held specific MP3 files. MP3 files, though, were not stored at the Napster site. Those
who downloaded files automatically were listed as servers for these files (unless they moved these
files to other directories or shut down the Napster server). The peer-to-peer networking
capability of Napster represented a substantial innovation in file distribution. A substantial
share of the music traded through Napster (and related services), though, involved illegal transfers of
copyrighted music. This resulted in some serious concerns in the music industry.
In the summer of 2000, the Recording Industry of America initiated a lawsuit against Napster,
claiming that Napster was involved in copyright violation. In July 2000, a lower court judge ordered
Napster to cease operation until it could block copyrighted material. This decision was stayed, pending review by a federal
appeals court. The appeals court upheld the lower court's decision in February 2001. Napster
continued operations while attempting to filter copyrighted material, but was not able to block
all copyrighted material. While Napster claimed a 99% success rate in blocking copyrighted material,
it was shut down on July 11 by the court until it was able to demonstrate a 100% compliance with the
court order. Napster has now moved to a paid membership system and has continued its efforts to
reach agreements with recording companies.
While Napster no longer serves as a peer-to-peer music distribution service, several alternative
services and software programs
have appeared that provide equivalent functionality. Gnutella, a program written by employees of AOL,
makes possible the widespread distribution of files (including program and video files as well
as MP3s) without central coordination. A wide variety of downloadable Gnutella clients are available that
have taken over much of the MP3 downloading activity. OpenNap, an open-source software project, provides a
free alternative to the Napster server (although,
this system also relies on central servers that would be vulnerable to lawsuits). Freenet, a
recent innovation, is a service that attempts to make it impossible to trace those who either
upload or download materials to their network. BitTorrent is another alternative peer-to-peer system
that allows for rapid file transfers without a central server. An interesting feature of BitTorrent
is that it uses a distributed system of filesharing in which an increase in the number of users raises
file transmission speeds (since each downloader also serves as an uploader of the portions of the files
that have already been received).
Advocates of peer-to-peer file distribution systems argue that services of this sort allow new
musicians to distribute music to a wide audience at virtually no cost. Some argue that the
existing system of music distribution provides the recording companies with a monopoly control
over the distribution of a given artist's music. This, it is suggested, results in high prices
and profits for these companies, but only limited rewards to most musicians. It is also claimed
that it is very difficult for new artists to break into the market under the existing system.
Opponents of peer-to-peer file distribution systems argue that copyright protection is
necessary to encourage innovation and risk-taking by artists and recording companies. They argue
that the high price of CDs is needed to cover the losses associated with recordings that are not
successful.
Regardless of the legal settlements of cases involving specific file distribution systems, the
online distribution of music provides a low-cost
alternative to the existing system of selling music on CDs and cassette tapes. Consumers who
have been able to acquire virtually any music that they wish for free are likely to continue
choosing this mechanism (as long as criminal penalties are
unlikely...). The challenge that the recording industry faces is to develop a new business
model that allows them to take advantage of the low-cost distribution mechanism provided by the
internet while remaining profitable. The new Napster, Apple's ITunes music service, MusicMatch,
and several other online
music distribution systems are attempting to provide a legal alternative to peer-to-peer file sharing
systems.
Primary Resources and Data
- Napster
http://www.napster.com/
This is the home page of the new Napster. This system provides paid access to a catalog of over 2 million downloadable songs.
- OpenNap: Open Source Napster Server
http://opennap.sourceforge.net/
OpenNap is a open source software project that provides an open source alternative to the
Napster server. It differs from the Napster server in that it allows for the sharing of any
media type and makes it possible for there to be a network of linked servers.
- Gnutella.com
http://www.gnutella.com/
This web site provides information about the Gnutella program, an open source file sharing program that
relies on peer-to-peer networking. A discussion board on Gnutella is available at this site.
- Madster
http://www.madster.com/
Madster (formerly known as Aimster) is a peer-to-peer client that provides file sharing
without any central server. The producers of this program changed the name as the result of
a lawsuit by AOL Time Warner. Madster is currently involved in legal battles with groups that
claim that it assists in copyright infringement. The service declared bankruptcy as a result of
lawsuits involving the RIAA.
- Limewire.com
http://www.limewire.com/
Limewire is a popular gnutella client that provides peer-to-peer file sharing capabilities.
This site provides information about the commercial version of the Limewire client software package.
- Limewire.org
http://www.limewire.org/
The open source version of Limewire is available for free downloads from this site. Information
on the Limewire package is available here.
- BearShare
http://www.bearshare.com/
BearShare is a another popular downloadable gnutella client that allows peer-to-peer file sharing.
- The Freenet Project
http://freenet.sourceforge.net/
The Freenet project, developed by Ian Clarke, is a peer-to-peer network that is designed to allow for the uncensored
distribution of information. Freenet is completely decentralized. This means that it cannot be
shut down as easily as Napster or other centralized services. It also means that material posted
to Freenet cannot be forcibly removed as long as freenet servers remain available somewhere on
the internet. Materials may be uploaded and downloaded to Freenet servers in an anonymous
manner. This web site provides an extensive collection of material concerning the Freenet
Project.
- iMesh
http://www.imesh.com/
IMesh provides another file sharing system that relies on a central server in a manner similar to Napster.
- Morpheus
http://www.morpheus.com/
Morpheus provides a peer-to-peer networking capability similar to gnutella. Morpheus provides search and download
capability for a wide variety of file types.
- Kazaa
http://www.kazaa.com
Kazaa provides an alternative peer-to-peer client that connects to the same network that is used
by the Morpheus client.
- BitTorrent
http://www.bittorrent.com/
BitTorrent.com provides the BitTorrent peer-to-peer client, but has also negotiated arrangements to
commercially (and legally) distribute a growing variety of music, video, and software files.
- Damien Cave, "The Mojo Solution"
http://www.salon.com/tech/view/2000/10/09/mojo_nation/index.html
This October 9, 2000 article contains a description of another file distribution service that
includes a elaborate system of payments to those who provide upload or computing services and
charges for downloads. The prices for these services change with supply and demand conditions.
- Recording Industry Association of America, "Legal Cases"
http://www.riaa.com/news/filings/default.asp
This Recording Industry Association of America (RIAA) website contains links to online documents from several copyright infriengment cases. Court transcripts
provide detailed arguments presented by both sides in these cases. Of particular interest are those related to the
Napster case. (The Adobe Acrobat
viewer plugin is required to view these documents. You may download this
viewer by clicking here.)
- Kathy Bowrey, "Intellectual property, peer to peer and resistance to regulation"
http://www.austlii.edu.au/au/other/CyberLRes/2001/5/
In this May 2001 study, Kathy Bowrey provides a useful discussion of the legal issues associated with peer to peer
file sharing systems.
- Pew Internet and American Life, "Downloading Free Music: Internet Music Lovers Don't Think It's Stealing"
http://www.pewinternet.org/reports/toc.asp?Report=23
This September 28, 2000 Pew Internet and American Life report indicates that 78% of the individuals
who download music and save it on their computers do not consider it to be stealing. The data
suggests that half of all music downloaders buy copies of the music that they download at
least some of the time. This study also suggests that approximately 11 million Americans (a majority of
music downloaders) have used Napster. The Adobe Acrobat viewer plugin is required to view this
document. You may download this viewer by clicking
here.)
- Recording Industry Association of America
http://www.riaa.com/
The web site of the Recording Industry Association of America contains information and statements
about their lawsuits against Napster and other file-sharing systems. They argue that peer-to-peer
file sharing systems are involved in massive copyright infringement.
- Eytan Adar and Bernando A. Huberman, "Free Riding on Gnutella"
http://www.firstmonday.dk/issues/issue5_10/adar/index.html
Eytan Adar and Bernando Huberman investigate traffic on Gnutella in this October 2, 2000
online article appearing in First Monday. They find that most users of Gnutella are free
riders who download files but provide none in return. Adar and Huberman note that the
incentive to free ride is larger as the size of the network grows. They suggest that such a
system may collapse on its own, regardless of copyright enforcement activity. (This article also
contains links to a variety of related articles and web sites in its bibliography.)
- CNet News.Com, "Online music-traders consider Napster alternatives"
http://news.cnet.com/news/0-1005-200-2924973.html
This October 3, 2000 online article provides an assessment of the possibilities for replacements
to Napster if the Court of Appeals shuts Napster down. It is noted that Gnutella and OpenNap rely,
in practice, on a limited number of servers that provide most of the content. These sites would be
vulnerable to lawsuits and could be shut down. It is suggested that while Freenet would be less
vulnerable to lawsuits, it is not currently a service that is likely to appeal to many users.
- Digital Millennium Copyright Act
http://www.loc.gov/copyright/legislation/dmca.pdf
This website contains a detailed summary of the Digital Millennium Copyright Act. The Digital \
Millennium Copyright Act updates U.S.
copyright law to take into account the existence of the internet. The Adobe Acrobat viewer plugin is required to view this
document. You may download this viewer by clicking
here.
- Copyright Law of the United States of America
http://lcweb.loc.gov/copyright/title17/
This site contains the complete text of U.S. copyright laws.
- United States Copyright Office
http://lcweb.loc.gov/copyright/
The web site of the United States Copyright Office contains information about copyright law,
a FAQ, and a variety of reports and studies that may be viewed online. Of particular interest is
an amicus curiae filing
in the Napster lawsuit.
- William Fisher, "MP3"
http://eon.law.harvard.edu/property00/MP3/main.html
These online materials on MP3 were used in support of a portion of William Fisher's online
course on "Intellectual Property in Cyberspace." This material provides a good introduction to
some of the issues associated with trade in MP3s. An extensive collection of links to relevant
resources is provided throughout the text of this document. The Adobe Acrobat viewer plugin is required to view this
document. You may download this viewer by clicking
here.
- Apple, "ITunes"
http://www.apple.com/itunes/
This website provides information about the paid music download service provided by Apple.
- MusicMatch
http://www.musicmatch.com/
This website provides information about the paid music download service provided by MusicMatch.
Different Perspectives in the Debate
- Electronic Frontier Foundation
http://www.eff.org/
The Electronic Frontier Foundation supports digital free expression
and online privacy and is opposed to government regulation of the internet.
This site contains a collection of articles and studies related to intellectual
property rights. A collection of links to other related sites is
also provided.
- Berkman Center for Internet & Society, "The Future of Intellectual Property on the Internet"
http://cyber.law.harvard.edu/futureofip/archive.asp
This web site contains a RealVideo version of the October 1, 2000 debate
between Jack Valenti (the head of the Motion Picture Association of
America) and Lawrence Lessig (a cyberlaw expert) concerning intellectual
property on the internet. (Viewing this debate requires that you install
the free RealPlayer
plugin for your browser.) This website also contains a list of links
to related resources on the internet.
- Aaron Pava, "Who Said What at Music Hearing"
http://www.zdnet.com/zdnn/stories/news/0,4586,2602292,00.html
This July 12, 2000 ZDNet Music article examines the arguments concerning Napster and
similar services. The primary focus of the article is on the issues raised by those testifying
before a Senate fact-finding committee during the summer of 2000. This site also
contains transcripts of the testimony of those who appeared before the committee. Their
comments provides a good overview of the relevant issues.
- Lars Ulrich, "Statement before the Senate Judiciary Committee"
http://judiciary.senate.gov/testimony.cfm?id=195&wit_id=252
In this July 11, 2000 statement, Lars Ulrich of Metallica expresses the reasons behind
his band's opposition to Napster. He argues that Napster harms artists by depriving them of
a reward for their creative effort. Ulrich suggests that downloading copyrighted music files
is a form of theft.
- Kevin Hurley, "The Internet's Invisible Hand"
http://www.americanoutlook.org/index.cfm?fuseaction=article_detail&id=1209
Kevin Hurley discusses the effect of Napster and similar systems in this Summer 2000 online article
in American Outlook Magazine. He argues that technological innovations will force recording
companies to lower prices and to work with internet-based companies to explore alternative
distribution mechanisms.
- Berkman Center for Internet & Society and Electronic Frontier Foundation, "Signal or Noise? The Future of
Music on the Net"
http://cyber.law.harvard.edu/events/netmusic_agenda.html
This web site contains information about a conference on internet music
sponsored by the Berkman Center for Internet & Society and the Electronic
Frontier Foundation. RealVideo presentations are available. (You must
have the RealPlayer plugin installed in your browser to view these presentations.
You may obtain the free plugin by clicking here.)
Of particular interest is the Briefing
Book contained on this site. This Briefing Book contains a collection
of interesting briefing materials and position papers.
- John Perry Barlow, "Napster.com and the Death of the Music Industry"
http://www.philzone.com/hotline/napster.html
John Perry Barlow, Grateful Dead Lyricist and co-founder of the Electronic Frontier Foundation,
presents his views on the impact of Napster in this online posting. Barlow argues that the internet
provides a low-cost distribution framework for music that is currently being obstructed by legal
barriers imposed by copyright laws. He argues that shared music files had increased
the demand for musical performances and musical releases issued by the Grateful Dead. Barlow suggests
that many musicians are discovering that "the best way to make money from music is to give it away."
He argues that eventually Napster and similar distribution mechanisms will lead to the downfall of
the recording industry. He suggests that this industry will not be missed since: "For over
a century, it has exploited both musicians and audiences." Barlow notes that humans "were providing
for the material needs of musicians for tens of thousands of years before copyright law" and
expects that this will continue in some form even with the existence of Napster and similar
mechanisms.
- Esther Dyson, "Intellectual Value"
http://www.wired.com/wired/archive/3.07/dyson.html
In this July 1995 article, Esther Dyson suggests that the economics of content will change dramatically
as a result of the internet. She argues that the ability to freely copy information will drive the
price of content close to zero. Dyson argues that in this new environment, individuals will receive
compensation from packaging content and providing services and not from the content itself.
- Andy Oram, "Gnutella and Freenet Represent True Technological Innovation"
http://www.oreillynet.com/lpt/a/208,
and
Andy Oram, "The Value of Gnutella and Freenet"
http://legalminds.lp.findlaw.com/list/cyber-rights/msg01235.html
In these two articles, both released on May 12, 2000, Andy Oram examines the innovations associated
with Gnutella and Freenet. In particular, he argues that the main contribution of Gnutella is
the ability to conduct distributed searches using a variety of search tools that
are most appropriate to the individual sites. He suggests that both Freenet and Gnutella
offer the advantage of making data on any one machine available to the whole network of
users. Freenet offers the advantage of being more easily scaled as the number of users
increases.
- Scott Rosenberg, "Napster -- friend or foe?"
http://dir.salon.com/tech/col/rose/2000/03/30/napster/index.html
Scott Rosenberg examines the possible impact of Napster in this March 30, 2000 article appearing in
Salon. He believes that, in the long run, Napster (or similar services) will lead to the
collapse of the music industry as we now know it. Rosenberg believes that eventually artists will
deliver their music directly to fans once an appropriate micropayments system is developed that
allows small payments to be made with low overhead costs.
- Courtney Love, "Speech on the Music Industry"
http://archive.salon.com/tech/feature/2000/06/14/love/
In this speech, Courtney Love argues that musical artists receive a very small compensation from
their creative efforts. She suggests that major label recording artist contracts are a form of
piracy in which the studios receive the benefit of the artists work. Love suggests that new
internet technologies offer the promise of a low-cost distribution mechanism, but need to develop
a method of compensating artists for their efforts.
- Report of Dr. Ingram Olkin
http://www.riaa.com/news/filings/pdf/napster/olkin.pdf
Ingram Olkin investigates the proportion of copyrighted material that
is downloaded by Napster users in this June 12, 2000 report. He finds
that the vast majority of songs were copyrighted. (This study was commissioned
by the Recording Institute Association of America.) (The Adobe Acrobat
viewer plugin is required to view this document. You may download this
viewer by clicking here.)
- Report of Michael Fine
http://www.riaa.com/news/filings/pdf/napster/fine.pdf
In this report, commissioned by the Recording Institute Association
of America, Michael Fine presents evidence suggesting that album sales
have suffered for music stores located near college campuses in which
a large proportion of students have access to high-speed internet connections.
It is suggested that Napster and similar packages are responsible for
this effect. (The Adobe Acrobat viewer plugin is required to view this
document. You may download this viewer by clicking here.)
- Hilary May Black, "Pricing Recorded Music in an Online World"
http://www.gtlaw.com.au/gt/site/articleIDs/...&template=domGT
Hilary May Black, of the Gilbert and Tobin law firm, investigates the effect of the internet
on the pricing of recorded music in this
July 14, 2000 online article. It is argued that a mechanism must be developed that allows for music
providers to protect value in recorded music. Black suggests that a new business model
needs to be developed for this industry.
- Robert Menta, "Big Music's Best Tool Against Napster - DVD"
http://www.mp3newswire.net/stories/2000/dvd.html
In this October 6, 2000 article, Robert Menta argues that the introduction of high quality DVD
music recordings may be the recording industry's best chance to overcome Napster and similar
MP3 distribution mechanisms. Since these DVDs provide substantially higher sound quality, competition
from lower quality MP3 recordings will have less impact on their sales (at least until higher quality
compressed digital recordings become available).
- Bram Cohen, "Incentives Build Robustness in BitTorrent"
http://www.bittorrent.org/bittorrentecon.pdf
Bram Cohen, in this May 22, 2003 article, argues that BitTorrent offers advantages for peer-to-peer
file sharing that are not available under alternative systems. He notes that this system
shifts much of the cost of downloads to the downloader. This occurs to a greater extent as the
number of downloaders increases. Cohen argues that the software is designed to work to achieve a
state of Pareto efficiency in file transfers since peers interact in transferring pieces of a file
if both can gain from the transaction. The Adobe Acrobat
viewer plugin is required to view this document. You may download this
viewer by clicking here.)
- Douglas Clement, "Was Napster Right? "
http://minneapolisfed.org/pubs/region/02-09/napster.cfm
In this September 2002 Region article, Douglas Clement examines arguments raised by Boldrin and Levine against current copyright
law. This article provides a very nice discussion of the economic rationale for current copyright and patent law as
well as a discussion of the Boldrin and Levine argument. This argument suggests that there are substantial incentives to innovate
in the absence of copyright protection. Clement provides a nice summary of the arguments for and against the Boldrin and Levine
thesis.
- Michele Boldrin and David K. Levine, "Perfectly Competitive Innovation"
http://minneapolisfed.org/research/sr/sr303.pdf
Michele Boldrin and David K. Levine provide an argument for the abolition of copyright and patent law in this March 2002 Federal Reserve
Bank of Minneapolis working paper. They argue that technological innovation will occur without copyright or patent protection as a result of
the "first-mover" advantage received by innovators. Boldrin and Levine suggest that competitive markets will be more
efficient in encouraging innovation than will monopolies created through copyright and patent law. It is argued that providing
the innovator with monopoly control of the uses of an innovation "reduces the incentive for further innovation."
(The Adobe Acrobat viewer plugin is required to view this
document. You may download this viewer by clicking
here.)
- Stuart E. Schechter, Rachel A. Greenstadt, and Michael D. Smith, "Trusted
Computing, Peer-To-Peer Distribution, and the Economics of Pirated Entertainment"
http://www.eecs.harvard.edu/~stuart/papers/eis03.pdf
Stuart E. Schechter, Rachel A. Greenstadt, and Michael D. Smith examine the effect of "trusted computing" systems
and peer-to-peer distribution in this May 29, 2003 research paper. They observe that the development
of low-cost peer-to-peer distribution networks has dramatically lowered the cost of distributing
pirated materials. The recording industry has responded by legal actions designed to raise barriers
to copying content. These methods are primarily based on data encryption and the distribution of
keys to platforms that are "trusted" by the media vendor. Schechter, Greenstadt, and Smith note,
though, that this system breaks down when the media is played in a format that may be viewed or
heard by the final recipient (since such material may always be captured). They also note that the
same system of file encryption and trusted computing can be used by pirates to distribute pirated
materials with less risk of detection. (The Adobe Acrobat viewer plugin is required to view this
document. You may download this viewer by clicking
here.)
- Athens University of Economics and Business - Network Economics and Services Group, "Peer-to-Peer Economics"
http://nes.aueb.gr/p2p.html
The Network Economics and Services Group of Athens University of Economics and Business discusses
the requirements for the development of an efficient peer-to-peer distribution system. This page summarizes
their research agenda and provides links to studies that they have conducted on this topic.
- Panayotis Antoniadis, "Economic Modelling and Incentive Mechanisms for Efficient Resource Provision in Peer-to-Peer Systems"
http://nes.aueb.gr/publications/2006.antoniadis_thesis.english.pdf
Panayotis Antoniadis provides a very detailed discussion of the economic issues associated with
the construction of an optimal peer-to-peer distribution system in his March 2006 Ph.D. dissertation.
This is modelled as a system in which there is private provision of a public good (since
files distributed over such networks are nonrival in consumption). One of the issues addressed
in this study is the creation of an incentive system to address the free-rider problem
inherent in the provision of public goods. (The Adobe Acrobat viewer plugin is required to view this
document. You may download this viewer by clicking
here.)
- Rufus Pollock, "P2P, Online File-Sharing, and the Music Industry"
http://www.thefactz.org/economics/p2p_summary.html
This website, created by Rufus Pollock, provides a summary and critique of several recent studies
of the effect of file-sharing networks on the music industry and on social welfare.
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