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section heading icon     P2P, music and video

This page looks at intellectual property aspects of online music and video, in particular P2P.

It covers -

It is supported by a supplementary profile on filesharing.

subsection heading icon     introduction

Online music is being presented as the 'canary down the mine' for both intellectual property and commercial electronic publishing.

Some pundits acclaim technologies such as Napster and Gnutella as the death of copyright or of record companies. That view of 'old media' as a road-kill on the information highway was represented at the January 2001 Future of Music conference, in Peer-to-Peer: Harnessing the Power of Disruptive Technologies (Sebastopol: O'Reilly 2001) edited by Andy Oram and the populist Sonic Boom: Napster, P2P & the Battle for the Future of Music (London: Fourth Estate 2001) by John Alderman. Copyright and the music conglomerates are dead; artists will make a living busking. (One of the few attempts to seriously grapple with the 'busking' model is The Street Performer Protocol, a provocative 1999 paper by John Kelsey and Bruce Schneier.)

Martin Williams' thesis on The Implications of MP3 Technology & Digital Distribution on the International Music Industry & Its Stakeholders, the 2002 paper by Kathy Bowrey & Matthew Rimmer on Rip, Mix, Burn: The Politics of Peer to Peer and Copyright Law, David Post's paper on Napster, Jefferson’s Moose & the Law of Cyberspace and Stan Liebowitz's sceptical 2002 paper Record Sales, MP3 Downloads & the Annihilation Hypothesis (PDF) are also of particular interest.

Others argue that it is merely a matter of time before law (contract and IP) and technologies put the genie back into the bottle. 

Harold Vogel's Entertainment Industry Economics (Cambridge: Cambridge Uni Press 1998), Lawrence Lessig's Code & Other Laws of Cyberspace (New York: Basic Books 1999) and Understanding the Digital Economy: Data, Tools & Research (Cambridge: MIT Press 2000), edited by Erik Brynjolfsson & Brian Kahin suggest why 'garage' publishing and major recording conglomerates may co-exist in future, although expect the major players to get most of the ear-time and most of the revenue

James Coover's Music Publishing, Copyright & Piracy in Victorian England (London: Mansell 1985) and Adrian Johns' 2002 Pop Music Pirate Hunters (PDF) provide a historical perspective on Lessig's question of what would happen if government actively regulated IP and other aspects of cyberspace, given what some industry figures claim is anaemic enforcement of the US 1997 No Electronic Theft Act and 98 Digital Millennium Copyright Act.

Coover documents how a "determined blend of legislation, litigation and leg-breaking" snuffed out the thriving music piracy business at the beginning of last century. His discussion is placed in context by The Dissemination of Music: Studies in the History of Music Publishing (New York: Gordon & Breach 1994) edited by Hans Lenneberg.

There are other perspectives in our profile on past communications revolutions, in particular the recording and broadcasting pages.

For the notion of the music business as unlike other content industries consult Norman Lebrecht's mordant When The Music Stops (New York: Simon & Schuster 1996), Louis Barfe's Where Have All the Good Times Gone? The Rise & Fall of the Record Industry (Boston: Atlantic Books 2004) and Fredric Dannen's acerbic Hit Men: Power Brokers & Fast Money Inside The Music Business (New York: Vintage 1991). There's a broader view in the lucid 2000 paper by Martin Kretschmer, George Klimis & Roger Wallis on The Global Music Industry in the Digital Environment: A Study of Strategic Intent & Policy Responses 1996-99 (PDF).  

subsection heading icon     recorded music and copyright

Copyright protection for music has moved from protection of sheet music - protecting the ink on the paper - to embrace musical performance, whether that is over the radio, on a physical entity such as a compact disk, via the internet or incorporated in a film.

As with other areas of copyright it often involves layers of rights and a range of rights owners/administrators, including lyricists, composers, publishers of the scores, record companies and copyright collecting societies.

Specific UK legislation to protect music dates from 1848. The French Societe des Auteurs, Compositeurs et Editeurs de Musique (SACEM) - a copyright collecting society for creators and publishers - was established in 1850 and served as a model for other societies such as the UK Performing Rights Society (PRS), German Gesellschaft fur Musikalische Auffuhrungs (GEMA) and Australia's Australian Performing Right Association (APRA).

In the UK and Australia the 1911 Copyright Acts reflected the Berlin revision to the Berne Convention, providing a royalty - the so-called 'mechanicals' - for each wax cylinder, record, or piano roll manufactured. US recording legislation dates from 1909, when a campaign by John Philip Sousa and Victor Herbert (the Andrew Lloyd Webber of the day) gained a royalty of two cents per recording, in line with royalties for concert or other commercial performances.

The American Society of Composers, Authors, & Publishers (ASCAP) was established in 1914 and survived creation by broadcasters in 1939 of a competing organisation, Broadcast Music Incorporated (BMI). In 1926 the national rights management bodies formed an international confederation, the Confederation Internationale des Societes Auteurs & Compositeurs (CISAC).

The most recent landmark has been the US Audio Home Recording Act of 1992 which imposed levies on digital audio-recording devices and media. Record companies get 38% of the royalties, featured performers 26%, publishers and writers get 17% each, and the remainder is divided among unfeatured musicians and vocalists.

Similar US legislation is in place for digital broadcasting. Lawrence Lessig's The Future of Ideas: The Fate of the Commons in a Connected World (New York: Random 01) seems to envisage compulsory licensing of digital content - in particular music - with authors and publishers being remunerated through a flat copyright levy administed by a new copyright collecting society.

Ruth Towse's 2001 Copyright & the Cultural Industries: Incentives and Earnings (PDF) notes a UK Monopolies & Mergers Commission (MMC) study suggesting that for a major record company the outlay for an album is around £0.25m to £0.75m, of which £25,000 to £0.4m are recoupable from artists' royalties if they are great enough.

In aggregate, the five major record companies in the UK - BMG (Bertelsmann), EMI, Polygram (Vivendi), Sony and Warner (Time Warner) - recouped around 50% of their A&R expenditure in 1993. A&R expenditure written off came to 15.4% of gross sales; marketing accounted for 15.9%. The figures have, however, been criticised as representing an unusually good year.

subsection heading icon     net radio

The public performance of prerecorded music usually involves a bundle of rights, typically

  • copyright in the musical work (initially owned by the composer and lyricist but usually assigned to a music publisher) and
  • copyright in the sound recording, the particular fixed performance of that musical work, typically owned by the record label.

Any broadcast or transmission that includes the musical work is a public performance, for which the broadcaster would have to pay royalties to the owner of the musical work in the form of a collective license. Licenses vary from jurisdiction to jurisdiction.

In the US for example if the broadcast/transmission is analogue the sound recording copyright owner gets nothing but must be remunerated if the broadcast or transmission is digital. Under the DMCA a digital radio broadcast (over-the-air) is exempt from having to pay royalties to the sound recording copyright owner, but internet radio is not. Net radio is subject to a compulsory license, the rates of which are set by the Librarian of Congress.

The US compulsory license regime for net radio involves payment by the broadcasters to copyright owners for use of recordings. The regime has been criticised because royalties for net radio are on a per song, per listener basis rather than a percentage of gross revenues. That has meant that if a net radio station has a lot of listeners but insufficient revenue from advertising or other sources it can't afford the royalties.

US licensing mechanisms have yet to come fully engage with Podcasting.

subsection heading icon     piracy

As discussed later in this guide, figures for piracy and one-off infringements are contentious.

In 1982 the International Federation for the Phonographic Industry (IFPI) - the record industry advocacy group - estimated piracy at 11% of the total market in North America, 21% in Latin America, 30% in Africa and 66% in Asia. In 2000 it estimated (PDF) that 36% of the disks and cassettes sold across the globe were pirated - around 1.8 billion items.

We've highlighted debate about the Digital Millennium Copyright Act (DMCA) earlier in this guide. A starting point for considering US discussion about anti-circumvention provisions is Dan Burk's 2002 paper (PDF) on Anti-Circumvention Misuse.

A separate profile points to studies of consumer attitudes about music filesharing and estimates about the incidence of online copying.

subsection heading icon     MP3

Paul Rapp's 2001 Somewhat Legal Look at the Dawn and Dusk of the Napster Controversy commented that

the wagons are circling. The music industry, over the past several years, has experienced unprecedented corporate consolidation. There were some eight major record labels a few years ago; soon there will be only four. This consolidation has resulted in a uniformity in the industry's response to the perceived dangers lurking on the internet, and a marked lack of creativity in that response.

In addition, this concentration of power has greatly affected the content of the music that the majors have offered to the public. In short, there is less variety and much less volume, in terms of the number of titles and artists, in the music being offered. Artists have been handed their walking papers, dropped by labels that have decided to concentrate on chart-topping, manufactured content providers like Brittany Spears and N'Synch. Any college kid with an ear to the ground of popular music has a favorite band that has gotten the boot. Classical and jazz divisions are being eviscerated. The industry looks less like a vehicle to deliver culture and more like, well, an industry, one devoted to the lowest common denominator and to hell with everything else.

It's little wonder, then, that the music industry's cries of righteous indignation about the horrors of the Internet have been met with unstifled yawns and a few snickers of disgust. The industry has made itself into the boogey-man, and music aficionados, especially college kids, could care less whether the industry lives or dies.

A fundamental reason why there is an MP3 phenomenon is that the music industry has failed, refused, to pick up the ball. There is no way to receive the vast majority of major label music digitally over the Internet except for free. Even if you wanted to buy major label music over the Internet, you can't, because the major labels have yet to offer their music digitally in a downloadable format.

MP3 (Moving Picture Expert Group 1 Audio Layer 3) is a standard for the compression of audio recordings, with that music being played on personal computers and special MP3 devices. It has proved significantly more popular than proprietary formats such as Microsoft's Windows Media Audio Player (WMA). 

It dates from 1987, when collaboration between Germany's Fraunhofer Institute and the University of Erlangen resulted in a music compression/decompression algorithm that could shrink sound files by 90% without unduly sacrificing quality. In 1992 it was approved as an MPEG standard.

However it didn't take off for another six years, when consumer access to a new generation of faster personal computers and modems - and the example of peers - encouraged the large-scale download of MP3 files. In 1999 Wired magazine claimed that

about 846 million new CDs were sold last year. But at least 17 million MP3 files are downloaded from the Net each day. That adds up to almost 3 billion in the first six months of 1999.

Compression means that files - generally a single song - can be distributed over the net, whether from a central repository or between individual personal computers. That means performers and publishers can go direct to consumers. It has also meant that consumers and commercial pirates can ignore concerns about intellectual property: use a search engine to find an authorised or illicit copy of the particular recording and download it for free. 

Many consumers consider that the loss of sound quality during compression is offset by the convenience of accessing the music. And for many there's a frisson in appropriating the property of the evil record companies. 

Estimates about the use (and misuse) of MP3 are problematical. Overall it is likely that there are over a billion files in cyberspace, with a considerable number of duplicates.

The economic impact is unclear. Research by the independent Pew Internet & American Life project suggests that about 13 million US citizens (14% of US internet users) have downloaded free music files that they do not own in other forms, although figures for 'repeat' downloading are less certain. Perhaps less than 2% of internet users have paid for downloading music. A perspective is provided by the music industry's claim in the IFPI Music Piracy Report 2000 (PDF) that one in three music recordings worldwide is pirated.

Chris Gilbey's The Infinite Digital Jukebox: Everything You Need To Know About Downloading CD-Quality Music From The Internet (South Yarra: Hardie Grant 2000) is an introduction for consumers to MP3. 

There is a more nuanced examination of intellectual property issues in Paul Goldstein's Copyright's Highway: The Law & Lore of Copyright from Gutenberg to the Celestial Jukebox (New York: Hill & Wang 1994).

subsection heading icon     Napster

The ease with which digital music can be copied means that record companies have been reluctant to distribute music online from central repositories, pending the establishment of effective copy protection systems such as SDMI. Their perception has been that placing a recording on the web means kissing goodbye to the intellectual property.

That has not stopped businesses such as Napster, now within the Bertelsmann orbit, which sought to act as commercial intermediaries in the 'peer-to-peer' distribution of recordings between personal computers. That distribution is often described as 'swapping', although most studies suggest that 93% of the traffic is one-way (ie most consumers only download).

An October 2000 paper by Eytan Adar & Bernardo Huberman on Free Riding on Gnutella for example argues that 70% of Gnutella users share no files, with 50% of activity involving the top 1% of hosts. That's consistent with the analysis in Mancur Olson's bleak The Logic of Collective Action: Public Goods and the Theory of Groups (Cambridge: Harvard Uni Press 1971).

Others have noted the high incidence of mislabelled, defective or partial files on Napster and P2P systems and concerns about viruses and privacy abuses. The "pro-artist" StopNapster site advocated sabotage through mislabelling of files: "Just think of the reaction you'll get from users who think they're downloading the new Beastie Boys track but instead get four minutes of dogs barking, sirens going off, etc."

Napster (like rivals such as Scour) established a central server to facilitate identification of and access to MP3 files held on the personal computers of its subscribers. The server identified each machine and the MP3 files, becoming what some of the more starry-eyed described as "nothing more than the world's largest music directory". 

It did not differentiate between authorised and illegal copies, with critics alleging that 87% of files on the server were illegal copies. At its peak Napster probably had over 40 million subscribers, with perhaps  600 000 songs available via its server and as many as a billion MP3 files located somewhere in cyberspace. 

Although the Napster server was not a permanent repository of MP3 files it was the basis of a large-scale commercial operation based in in a particular jurisdiction and thus subject to a range of law. In December 1999 the Recording Industry Association of America litigated against Napster, MP3.com, Scour and similar bodies. It was joined by other rights owners and gained the support of performers such as Metallica.

The rights owners successfully charged that Napster and similar intermediaries were contributing to copyright infringements by facilitating the distribution of illegal MP3, video recordings and other files. The RIAA for example claimed US$100 000 in damages for each infringing file. 

That provoked the usual cyberselfish rhetoric that we live in an age where copyright and freedom of speech cannot coexist, so goodbye copyright. One example was Jaron Lanier's alarmist article asserting that copyright is "a massive government-sponsored protection racket" and "if we make Napster-like free file sharing illegal, we'll have to rid ourselves of either computers or democracy". Oram's Peer-to-Peer, noted above, collects such views.

In response to the litigation some of facilitators, such as Scour, closed after investors withdrew funding. Some, such as MP3.com, changed their operation after US courts imposed multi-million dollar fines and rejected claims that activity was protected by the 1992 Audio Home Recording Act (AHRA). Caught between unsympathetic courts and waning investor support, Napster succumbed to the uncertain embrace of Bertelsmann, one of the three global music giants, and is apparently now expiring. 

subsection heading icon     gnutella

'Free Music' advocates have dismissed Napster as irrelevant, argung that the future lies in regimes that don't involve an intermediary and don't involve any payment, thereby evading detection.

Despite the hype about an irresistible "earthquake" that will sweep away traditional publishing (in particular the satanic record companies), file-swapping systems such as Gnutella arguably remain a fringe activity. 

That is partly because the software - like Linux - is not consumer friendly. As one insider says "Gnutella is not for mainstream users who don't understand what an IP address is". 

And it is partly because network problems - among them the lack of a central directory, so that each machine on the network needs to be searched - mean that access to the music is very slow. So slow, indeed, that most casual users simply give up. 

Analysts Clip2 estimate that Gnutella's users, at peak times, haven't been larger than 200 thousand per day, compared to Napster's 8.5 million. Another estimate was that 3.05 billion files were shared on Gnutella in August 2001. Michael Mehta, Don Best & Nancy Poon's rather thin 2002 paper on Peer-to-peer sharing on the Internet: An analysis of how Gnutella networks are used to distribute pornographic material suggested significant variation in the amount of data shared in October 2001: the number of files ranged from 115,000 to 21 billion (with a mean of 4.3 billion files and mean amount of data at 6.1 terabytes).

P2P also poses significant privacy challenges, with evidence that direct marketers are actively exploiting the ability to track consumption patterns and send 'real time' messages to selected consumers as the music downloads.

Despite the hype, much of the growth of Napster has been about economics and ease of use, rather than against copyright. Our expectation is that faced with a choice between mastering gnutella and a small monthly for high quality legal access, most consumers will simply plump for the subscription. That will reduce the number of copyright violators, enhancing industry enforcement measures, encouraging growth of subscriptions, and so on.

subsection heading icon     file swapping schemes

There are a large number of 'swapping' schemes, many of which have not attracted a significant audience.

Sourceforge offers a Register of Sharing Protocols other than Napster. There is a similar listing on the AfterNapster site, which as of April 2002 identified 111 alternatives to Napster. Some include -

Some text-oriented sites are highlighted in the Electronic Publishing guide elsewhere on this site.

The major music groups and some independents have been cautiously launching services that offer access to music on a per-item or subscription basis. The most successful so far has been Apple's iTunes. Other services include MusicNet (RealNetworks, AOLTW's Warner Music, EMI and Bertelsmann's BMG), Pressplay (Universal Music and Sony) and Rhapsody (Listen.com).


subsection heading icon     Ring tones

An note on intellectual property aspects of licensing and downloading music for personalised mobile phone ring tones is here.



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