With a verdict looming in the Napster trial, the recording industry is lobbying for stronger copyright laws. But the Napster case illustrates why stricter laws would be ineffective and harmful. Copyrights are vital but, as the recording industry's investments reveal, technological innovation is the best hope against Internet piracy.
By helping users copy and trade MP3 song files, Napster's free software facilitates widespread piracy. The site's 25 million users make millions of copies every day, usually of songs uploaded from copyrighted CDs. And record companies know Napster is only the beginning.
Shrouded in virtual anonymity, more and more consumers will copy songs instead of buying them. Fearing its profits will plummet, the recording industry hopes litigation can secure favorable legal precedents, and Napster is the test case. On October 2nd, the Recording Industry Association of America presented its final argument to the Ninth Circuit Court of Appeals in San Francisco. But because copyright law is murky, the verdict is up for grabs.
The law strikes a delicate balance between owners' rights and users' interests. On the owners' side, the RIAA argues that Napster is illegal simply because it makes piracy easy. Napster's lawyers weaken this claim with two facts. First, Napster is a legitimate, legal technology that can be used illegally. It is, therefore, akin to videocassette recorders, which the Supreme Court has protected.
Second, laws such as the 1992 Audio Home Recording Act establish a right to reproduce recordings noncommercially. Because Napster's users aren't selling copies, its lawyers argue, they aren't breaking laws. This might not be the case for long.
The entertainment industry intends to squeeze strong new legislation out of Congress. According to the Center for Responsive Politics, the industry has donated $9.9 million to various current candidates. It has also expanded its already vast network of lobbyists. The industry hopes legislators, swayed by this influence, will rewrite copyright laws so they clearly favor copyright owners. Such protections, however, would be ineffective and dangerous.
Stricter laws could shut down Napster, but they would not hinder piracy. As a centralized business operation, Napster provides lawyers with a fixed target. But, if the company falls, decentralized systems such as Freenet are waiting in the wings. Typically, these systems don't rely on central servers or corporate offices. Instead, they are launched into the ether as free software available for anyone to use or modify. As such, they are immune to legal sanctions. Contrary to its courtroom claims, the recording industry knows such sites will help piracy flourish, regardless of U.S. law.
This explains why industry leaders have together spent over $100 million investigating how to survive when copyrights don't. Much of this funding has gone towards the Secure Digital Music Initiative, a consortium now developing music files that can't be copied. Record companies are also developing business models that are less copyright-dependent. Several labels, for instance, will soon launch online subscription services selling a package of songs for a flat fee. If this is the industry's future, why is it trying to amend current laws?
That's because businesses like Napster threaten to erode industry profits by earning their own. Record companies, therefore, have incentives to destroy such legitimate competitors, even if illegitimate sites cannot be stopped. The problem arises when this competition takes place in Congress and the courts, instead of the marketplace. If the industry succeeds in altering copyright protections, critical commercial sectors could be stranded in the status quo.
By helping uncover the Internet music market, Napster has demonstrated how online innovations can reshape offline industries. Initially, major labels hoped the Internet would drive sales of packaged CDs. But Napster's popularity has forced them to begin constructing an online presence. Stricter laws, by limiting incentives to create legitimate new technologies, could hinder similar evolutions. Judges and legislators would be wise to prevent this situation.
The recording industry's experiments prove that the solution to Internet piracy is more innovation, not more laws. Policymakers should remember this as they consider the industry's legal arguments and legislative proposals. America's Information Age policies should reflect Internet realities, not industry demands.
*Justin Matlick is a Senior Fellow in Information Studies at the Pacific Research Institute. To learn more about PRI and the Center for Freedom and Technology, see www.pacificresearch.org.
