Future of Copyright on Internet

Content Layer: The future of the Copyright on the Internet

Fisher and Nesson

9:00 am

Fisher:  Assuming you understand the source or nature of the “crisis” of the entertainment industry – we are examining the legal regulation of digital media.

Revenues, except for the last couple of reports, for the music industry have slid – and industry experts expect this to continue.  Film industry expect this to affect them as well.

Lawyers for Film Industry think music industry waited too long to prevent this calamit from occurring.

Will explore options:

(Book coming out in August)

One option –

Outline book

1. Structure of Entertainment Industry
2. Tech Destabilization
3. Defense of the old order
4. Solution 1 – Taking property rights seriously
5. Solution 2 – A regulated industry
6. Solution 3 – Alternative compensation system

Looking at Solution 3

A dose of theory

1. Public Goods problem
1. Inventions – including entertainment works – are members of a class of goods referred to as public goods –

                                                              i.      Non-rivalrous – can be consumed by all without affecting supply

                                                            ii.      Nonexcludable – you can’t limit who has access

                                                          iii.      Danger of underproduction

1.      Creators may not be able to recoup cost of production through sales

2. Possible responses

                                                              i.      Government provides the good (e.g. armies, nasa)

                                                            ii.      Government subsidizes private production (e.g. NIH, NEA)

                                                          iii.      Government issues prizes (e.g. USSR, PRC, Madison)

                                                          iv.      Government protects producers against competition (e.g. private toll roads and bridges, patents and copyrights – something which has been relied upon greatly – but copyright law is deteriorating under the pressure of illegal copying of works.  Efforts to shore up have been ineffective.  So, alternative is stratagem 3 – reward system)

                                                            v.      Government assists producers in increasing “excludability” (e.g. trade-secret laws; boat-hull protection laws, DMCA § 1201)

3. Mechanics of reward system

                                                              i.      Registration

1.      Copyright owners register unencrypted recordings with Copyright Office

                                                            ii.      Size of fund

1.      Possible criteria

a.       Provide social surplus

b.      Fairnenss

c.       Make creators whole

d.      Preserve flourishing entertainment culture

2.      Estimating injuries

a.       Long form

                                                                                                                                      i.      Refers to chart of current flow of copyrights in music industry (from last year and in DVD notes)

                                                                                                                                    ii.      Producers and aggregators would get hurt from direct distribution to artists

b.      Short Form

                                                                                                                                      i.      Current damages estimated to be $2.3 billion

                                                          iii.      Taxation

1.      Income tax would charge each HH $27 and eventually rise to $250.

2.      Tax on devices and services necessary to listen to music – including broadband internet acces

a.       11.39%

b.      $5 per month on broadband access

                                                          iv.      Measuring value

1.      Estimate relative total value of each entertainment product to consumers

a.       Provide appropriate signals to creators

b.      Fairness: equity theory of distributive justice

c.       Minimize hazards of governmental determination of merits of works

2.      How?

a.       Count consumption

b.      Measure duration

c.       Voting

d.      External estimates

3.      Bottom line

a.       This alternative could cost less than half of what consumers currently pay

4. Advantages

                                                              i.      For consumers

1.      large savings

2.      unlimited access

3.      no price discrimination

4.      Culture diversity

                                                            ii.      For artists

1.      Reliable source of income

2.      Direct distribution to consumers

3.      Expand opportunities to create derivative works

4.      moral rights concerns

                                                          iii.      For suppliers of devices and services

1.      Increased taxes offset by increased demand (a negative

2.      But, demand for devices with high quality would rise

                                                          iv.      For public

1.      decreased litigation costs

2.      decreased encryption costs

5. Disadvantages

                                                              i.      Cross-subsidies, distortions and associated deadweight losses         

1.      taxes paid by those that may not benefit from system

                                                            ii.      Discretionary governmental power

1.      temptations for officials to impose their own judgments as to merit of works

                                                          iii.      Rent seeking

1.      lobbying for larger pot

                                                          iv.      Leakage across national boundaries

1.      French consumers would benefit from free access to American music via the Internet

6. Reality

                                                              i.      Music industry opposed to this scheme – so ain’t happening anytime soon

                                                            ii.      But a voluntary system could be built (Berkman center will build a demonstration system) – Brazil is building a system

7. Variations

                                                              i.      NUL (Netanel)

                                                            ii.      Global (Pearlman)

                                                          iii.      Entertainment Coop

1.      Artists register with private coop

2.      Revenues come from subscription fees

3.      services

4.      revenues distributed in accordance with revenue-sharing plan

5.      structure

6.      defects

Now to Nesson

John Perry Barlow suggested in 1994 that once bits began to flow attempts to protect copyright system would be like moving deckchairs on Titanic.  1998 Napster came along –

Possible outcome

Total Control

If industry could achieve lock down through some DRM scheme – obtain a trusted system wherein a holder of a copyright can’t transfer the content – then all would be regulated by contract.

In order to do it, the industry would have to take control of the end units, the computers.  Even then they have to worry with the analog hole (take recorder make digital copy of music coming through speakers)

Other Outcome

Total Surrender

Give up on copyrights – adopt Fisher’s scheme or something like that.  But many problems related to that – how to allocate, how to keep politics out (I like Gospel lets lower the fees), how to manage a national system within a global system.

A fisher system gives us an international, multi-govt solution with power over the entertainment industry – not good in my mind.

But, there’s a middle possibility where the war is not over, the battle continues

Napster as an event was like a riot – the windows to the music store were smashed, folks could rush in, take music, face no punishment, “stick it” to the producers who had been “gouging” it.

How to teach law when students get daily schooling on utter contempt of copyright laws.  And, they are abominable in some respects.  Original idea was good.  But from Jefferson forward we have lost the balance (e.g. derivative works, extended coverage, elimination of registration requirements)

For the last few years, culture grew accepting that music is something you get versus that which you buy.

Discusses problems with copyright lawsuits

1. Problem of proof
1. Must show file allegedly in violation is a property that is copyrightable
2. A title or screenshot is not sufficient
3. Need good forensics
4. These cases (RIAA) are settling without going to trial
2. Problem of legal claim
1. Is there a right against you making available a copy of a copyrighted work (distinction between making available and distributing)  Is there separate legal offense of making available a stolen good.  Canadian Court said that is akin to saying placing a copy machine in the library is making available for taking a copyrighted work.
2. RIAA says when Congress went along with TRIPS – they included in US law a make available clause.
3. This is different from Napster where it was obvious files were downloaded – the RIAA suits are against individuals – different
3. Question of practicality of RIAA law suites

Second form of stick

First in line auto competition

The objective is to protect new releases of copyrighted works with commercial value.

Technique of looking at net carefully – seeing “seed” or first appearance of protected work via means of audio signature.  The “program” basically “nails” the first offender and notifies the rest of the world of the infraction. (Program downloads all he can – while sending message to offending computer that they should take the offending work down).

Tests showed most complied.  Evaders move around but eventually go away.

Question is can you stay ahead of the rate of seeding?  Initial numbers suggest the seeding rate does not go geometric and therefore the scalability of the solution is sufficient.

Problems

1. It is a form of a Denial of Service attack
1. It is on behalf of legal holder
2. And defense of possession by force not threatening death or unsuitable harm
3. So, you can defend your property, so to speak.
2. In Internet law terms
1. Does auto competition exceed authorized access

                                                              i.      Does it violate computer fraud and abuse act?

                                                            ii.      Go back to test of authorized access

                                                          iii.      You’ve only accessed publicly shared folder – so you have some defense

                                                          iv.      Case law says user agreement protects you – law has been generated in cases where defendant is the bad guy – this case defendant would be the good guy.

Advantages

1. Prevents copyright from running forever
2. protects payment to artists
3. When it becomes no longer efficient to protect the work then it falls into the public domain.
4. Joe Average will see legitimate services like iTunes preferable to taking the risk of being caught.

Closing

New system needed.  Current solutions of been “blunderbuss” and “Technological naïveté”

Fisher

Talking about problem of ballot stuffing in his system (a producer/artist would want to run the numbers up so as to fraudulently increase their compensation).

He thinks a sampling mechanism, much like TIVO’s reporting mechanism, could create credible count.  Same credibility as the Nielsen ratings. 

Looking at the two models in an aggregate.

P2P is the most efficient mechanism ever created to distribute entertainment.  Nesson’s model would clog the network with attacks, place bogus files, and engage in what we have otherwise seen as illegal conduct.

My model would let consumers get more film (entertainment, etc) for less money.

Nesson would distribute under current regimes, indicators say prices will increase, litigation would still spread.  Arms race between record companies and developers of secure P2P systems.  Internet would be filled with spoofs.  Thinks this would lead to a cultural conflict that makes the war on drugs look like a skirmish.