Peer-to-Peer Networks and the Injustice of the Copyright Law - Essay Example

Peer-to-Peer Networks and the Injustice of the Copyright Law Henry David Thoreau once said that, "If the machine of government is of such a nature that it requires you to be the agent of injustice to another, then, I say, break the law" (Henry David Thoreau quotes, 2007). He may well have been referring to the copyright laws and peer-to-peer file sharing of the 21st century. To protect the interests of the recording industry, the government adopted a copyright law that restricted copying music for private use. Record companies, anxious over falling sales, pursued and prosecuted well intentioned citizens. Peer-to-peer services were sued and served with injunctions against operations. Users continued to break the law. Yet, these users that violated the law and placed themselves at threat of prosecution and fines were the true citizens. The illegal peer-to-peer services and the citizens that used them were instrumental in redefining the music industry for the benefit of both the consumer and the artist. The importance of the copyright law in reference to audio reproduction has been a direct result of the available technology. In the 1980s the cassette player was the main device available for music reproduction. Successive reproductions decreased the recording quality and manufactures and distributors were able to maintain a competitive edge with respect to product quality. In addition, there were no channels for trading copies and availability was limited to physical contact with the media. This generally restricted the ability to copy a tape to a limited circle of friends. Large scale counterfeit operations were easier to intercept in the marketing stream and were generally highly visible to law enforcement (Kim, 2004). Enforcement of the law was usually a matter of the priorities set by state agencies. In the case of the flourishing overseas bootleg markets, little enforcement was available. However, with the advent of the Internet, peer-to-peer networks, and the Internet the ability to trade and reproduce music has expanded exponentially. Digital MP3 copies do not degrade in quality, which removes the original manufacturers competitive edge. There is no need for physical contact of the media and there are no restrictions on the availability as the source can be anywhere in the world and totally anonymous. Historically, reproduction of copyrighted material has been exempted from coverage by the 'Fair and Private Use' clauses of the copyright laws. Fair use allows for the reproduction for certain academic, review, and informational purposes without the consent of the copyright holder. Private use allows for reproduction for personal use and no commercial gain. However, The United States copyright laws were amended in 1992 with the addition of Chapter 10 to the Audio Home Recording Act. This amendment specifically addressed the use of digital audio recording and playback devices and media. The courts have been clear as to the copyright infringement of the reproduction of MP3 audio on computing devices. To be considered a digital audio recording device, the equipment must be, "...designed or marketed for the primary purpose of, and that is capable of, making a digital audio copied recording for private use" (US Code collection, n.d.). Thus, the home computer and hard drive were not exempted from the copyright laws as an MP3 player or dictation machine may be. With the rapid onset of advancing technologies and the proliferation of peer-to-peer networking in the late 1990s, the Recording Industry Association of America (RIAA) became more pro-active in their efforts to insure the copyright laws were being enforced. The RIAA that represented the recording industry insisted, "...this theft has hurt the music community, with thousands of layoffs, songwriters out of work and new artists having a harder time getting signed and breaking into the business" (Piracy: Online and on the street, n.d.). The trade group asserted that it was losing billions of dollars to services such as Napster, WinMX, Morpheus, and Kazaa. The peer-to-peer services maintained that they were simply supplying what the market demanded and that they were protected under the 'Private Use' exemption of the copyright law. The RIAA's strategy was to sue the services to cease operations, deploy investigators around the country, intimidate users through a series of high profile criminal cases, and target individual users. The loss of over $4 billion, the outward appearances of the enforcement efforts, and the rhetoric from the recording industry was exaggerated and in sharp contrast to the reality of the industry. There was truth in the fact that CD sales had declined between the years 2000-2004. During this period, the peak of Napster and other similar services, the number of CDs sold was down by 20% while revenues fell by nearly 15% (2006 U.S. manufacturers' unit shipments and value chart, 2007, p.1). This represented an estimated $1.8 billion loss in 2004 in CD sales due to piracy, or $150 million per month. However, Jefferson Graham of the USA Today reported that Napster transferred 2 billion songs during January 2001 (as cited in Green, 2002, p.2). At today's market price of $1 per song, 1.85 billion songs (92% of the total) were songs that the user would not have purchased anyway. When you add in the other services that were active at the time the 92% figure would approach and may even exceed 95%. This 95% figure represented a potential market that the RIAA was unwilling to accommodate because it meant giving up their position in the marketplace. A full 19 out of 20 songs that were being transferred by the peer-to-peer services were songs that individuals wished to get as a single that were not available on any other format or media. These included out of print items, songs that had not been digitized, and singles off of a CD that a consumer was unwilling to purchase at the $10-$18 price. As further evidence that consumers were shopping for singles and not CDs can be seen in the decline of single sales. Between the years 2000 and 2004 single sales were down by almost 85% (2006 U.S. manufacturers' unit shipments and value chart, 2007, p.1). It was apparent that the industry was lagging behind the technology and was not offering the consumers the format and media that they desired. Through this period the record companies had ample opportunity to upgrade their systems to accommodate the digital delivery via the Internet. In 2004, the industry relented to the technology and began to sell MP3 singles in a downloadable online format. The numbers speak for the popularity. Total single sales (downloadable and hard-copy) have seen a 50 fold increase from 2003 to 2006 while revenue for singles have seen a 1000% increase during that same period (2006 U.S. manufacturers' unit shipments and value chart, 2007, p.1). Once the industry made the desired format available for sale, the consumer was quick to switch from peer sharing to purchasing. So why was the industry so reluctant to embrace the new technology and take so long to implement a system that had been invented by a 19-year-old college student 5 years earlier The issue was not money or theft as has been shown by the existing data. The technology offered the industry adequate opportunity to increase sales as has been seen since its adoption in 2004. The exaggerated economic issue was an inconsequential loss that would not be gained by prosecuting their customers and fans. It was not to protect the artists as a study by the Pew Internet & American Life Project found that 43% of the paid artists agreed that, "...file-sharing services are not really bad for artists, since they help to promote and distribute an artist's work to a broad audience" (as cited in Gayer & Shy, 2005, p.487). The overriding concern of the RIAA and the record industry was to maintain control over the distribution system. Digital distribution allows small independent labels to distribute their music and compete on equal terms with the large record labels. Jacover (2002) contends that above money and theft the record companies are concerned that digital distribution would, "... most importantly, disrupt their stranglehold on music distribution" (p.2). A small independent producer encounters substantial difficulty in entering the CD distribution channels. They are primarily sold through large retail outlets such as Tower Records, Wal-Mart, and Best Buy. New artists and small labels do not fit well in that marketplace. By limiting the format to the physical CD, the large record companies have near total control over the distribution of music. In addition to controlling the distribution, the record companies also are able to control the content. Through promotion and advertisement they are able to limit the listeners choices. The digital format and Internet distribution have made it possible to promote a wider variety of music from any band with a recording studio in their basement. This has released artists from the long held belief that, "...record companies have taken advantage of artists for years by acquiring the rights to the artists' works through unequal bargaining positions..." (Jacover, 2002, p.2). The RIAA's insistence on eliminating and limiting digital distribution was due in part to their understanding that they would be losing market share to smaller and more creative artists. They would no longer be able to fill an album with marginal material when the consumer only liked one or two songs on the CD. The handful of large labels would no longer be able to sell a not-so-gullible public material it does not prefer. In conclusion, the digital revolution has been good for the consumer and the artist. The consumer wants a wider choice of music and an opportunity to purchase the songs they want rather than an album that they may not wish to purchase. When the recording industry finally succumbed to the inevitable technological trends they were able to begin to recoup their financial losses. However, they have done this at the cost of relinquishing their greedy hold on distribution and content. While peer-to-peer sharing may violate the intent of the law, it has been instrumental in forcing the hand of the RIAA and compelling them to open the marketplace to more competition and more consumer choice. References 2006 U.S. manufacturers' unit shipments and value chart (2007). Retrieved July 16, 2007, from http://www.riaa.com/keystatistics.php Copyright Law of the United States of America (n.d.). Retrieved July 16, 2007, from http://www.copyright.gov/title17/92chap10.html Gayer, A., & Shy, O. (2005). Copyright enforcement in the digital era [Electronic version]. CESifo Economic Studies, 51(2-3), 487-499. Green, M. (2002). Napster opens Pandora's box: Examining how file-sharing services threaten the enforcement of copyright on the Internet. Ohio State Law Journal, 63(799), 1-20. Henry David Thoreau quotes (2007). Retrieved July 17, 2007, from http://www.brainyquote.com/quotes/authors/h/henry_david_thoreau.html Jacover, A. (2002). I want my MP3! Creating a legal and practical scheme to combat [Electronic version]. Georgetown Law Journal, 1-24. Kim, P. (2004). Peer to peer technology and copyright. Retrieved July 17, 2007, from http://www.msu.edu/user/schmid/sungjoong.htm Piracy: Online and on the street (n.d.). Retrieved July 16, 2007, from http://www.riaa.com/physicalpiracy.php US Code collection (n.d.). Retrieved July 16, 2007, from http://www.law.cornell.edu/uscode/html/uscode17/usc_sec_17_00001001----000-.html Read More