A & M Records, Inc. v. Napster, Inc. was an incredibly significant court decision in that it was the first to address copyright laws in peer to peer file-sharing. Shawn Fanning’s Napster was the first major user-friendly service to download music on the internet and the record companies were very concerned that this would impact their sales. The recording companies accused Napster of copyright infringement. Napster responded by pointing out three kinds of fair use in sampling, where users could listen to a song before buying it; space shifting, where users could get a song on their computer that they already own on CD; and permissive distribution of songs from artists who chose to use Napster as a tool to get their music out to the public.

The court ruled that Napster infringed on the copyright holder’s exclusive rights of reproduction and distribution. The court said that samples were not fair use because they were permanent copies on the user’s computer. The court also ruled that the space-shifting argument was not valid because the shift made the song available to everyone else on the network and not just for their personal use.

The legacy of this case is that those who run websites or online services can be held liable for connecting people to copyrighted work. In the aftermath of this case, many companies tried to bypass this ruling by setting up their servers in different ways or making the transfer of digital material untraceable. Ultimately, the Grokster decision pretty much stated that the owner can be liable by knowingly facilitating the infringing of copyrighted material regardless of how their service is technically set up.

            This case is an appeal by Napster of an injunction that does not require the plaintiffs to provide any individual file names of potentially infringing works available on the Napster system. The orders require the plaintiff to provide notice to Napster of copyrighted works by providing the title and artist name for each work. When given a list of copyrighted recordings, Napster would have three days to search all files on its system and prevent the transmitting or distribution of those files. Plaintiffs had sent in notices of hundreds of thousands of copyrighted works without the corresponding file names in the Napster system. Napster complained that the plaintiffs did not provide variants in song and artist name and could mix complying items in the same notice as non-complying items because Napster could not check in the time allowed by the injunction. The consequence was that Napster would end up blocking many authorized files.  The arguments were that the DMCA set limitations on the judicial power of ISPs such as Napster, did not assess the "staple article of commerce" doctrine set forth in Sony, and that Napster has commercially significant non-infringing uses but is forced to block sharing of files even though the names do not always correspond with the contents of those files.

 

            This case brings up some important points in my research about why copyright holders are finding it beneficial in some cases to waive some of their copyright in order to use new technologies such as MP3 blogs to promote music, while they continue to fight similar technology such as peer-to-peer services. Any discussion of Internet Service Providers (ISPs) liability is important because it affects how people can make blogs and share new things over the internet. There are several ISPs which allow anyone to create a blog from them, and these businesses are based on previous cases such as the Sony Corp v. Universal City Studios, Inc case where liability of technology providers is limited if they do not have specific knowledge of infringing uses of the technology. It also shows how even though a company can send take down notices, it is still difficult and costly to actually take a case to court and win it, no matter how clear cut it originally seems.

            This essay describes what an MP3 blog is, and how record labels want to capitalize on the promotion that they provide while fighting file sharing at the same time. The essay discusses the types of copyright infringement and fair use and how they apply to MP3 blogs, as well as the factors that cause the court to view MP3 blogs more favorably than peer-to-peer networks. It discusses law suits against Napster and also by the RIAA against peer-to-peer users.  The article explains what establishes liability for infringing use, and the different expansions of the Copyright Act which have been brought by copyright owners in addressing new technologies. It then discusses some of these acts and gives some examples of violators. The next section explains the defense used when copyright owners bring suits, which is fair use, and it lists and describes the four factors in deciding fair use on a case by case basis.

 

            This essay incorporates basically every aspect of my research into why copyright holders are willing to waive certain copyright in cases such as MP3 blogs, while they continue to fight against much of new technology such as peer-to-peer services. It describes what MP3 blogs are and how they are used and different sites that can link to the unauthorized music.  It shows what the copyright holder needs to look for in order to bring a suit against infringing users, and also explains how the user of the work can try to use fair use as a defense.

The thesis of this article is that for the major recording labels to stay atop the music industry, they will have to embrace both technological and creative risks.

They will need to find ways to reach more users via the internet. Until recently, recording companies have viewed the internet as the enemy rather than an opportunity. They have gone with the strategy of litigating the fans that use peer to peer networks instead of finding a sustainable business model that will put their content online. As a result, sales decreased by a fifth between 1999 and 2003.

More recently, however, the recording industry has made inroads to accepting that the internet and digital technology will shape the music industry’s future. Apple’s iTunes service proved to music executives that the legal download market is viable. With this realization, recording companies are trying to figure out how to change their business model to take advantage of the internet.

Another problem which is just as important as piracy is the recording companies’ inability to develop new artists into strong sustainable brand names. The emphasis on one hit wonders is also to blame for the decline in CD sales. In fact, an internal report at one of the major recording studios found that between 2/3 and ¾ of the decline in CD sales was unrelated to online piracy. By embracing the internet, which bypasses more conservative retailers, the recording companies could gain the confidence to support new, innovative music.

Additionally, when an online business model unfolds, higher quality artists will be more profitable. Currently people buy single tracks much more often than whole albums. However, it is in the recording studios interest for users to spend 12$ on a whole album from one artist than to buy 2 songs from 6 different artists.

 

Importance to Thesis:

This article is important to my thesis in that it helps highlight the strategic mistakes that recording companies are repeating in response to peer-to-peer networks.  Music companies are exaggerating the threat of P2P networks, just as movie studios exaggerated the threat of the VCR.  In fact, the majority of the recent decline in CD sales is due to factors other than online piracy.  In addition, recording companies ignored the new markets that they could reach through online distribution, just as movie studios neglected to see that the VCR would expand their viewer base.  This article thus helps draw two parallels between the VCR and P2P networks, and allows me to apply historical lessons to the current situation facing recording companies.  

 

Tim Wu in this Slate article describes in detail the differences between YouTube and Napster and why he believes that YouTube has very solid legal footing. Wu simply says the YouTube has a safe harbor provision in the DMCA protecting them, while  He also describes the "Bell lobbyists" and how their efforts set the foundation for YouTube's seemingly successful business model. 

The Bell lobbyists, Wu writes, fought one of the greatest copyright struggles in history when it took on Hollywood over the liability of internet companies for copyright infringement.  Wu describes the clash of these two entities as "Frazier meeting Foreman", saying that the unstoppable force that was the Hollywood lobbying team finally met an immovable object in the Bell lobbyists.  Hollywood, on one side, wanted internet sites to be responsible for all content on their site, even if they were unaware of the infringing content.  The Bell lobbyists insisted that this was ludacris and fought against Hollywood's lobbyists with all their political might.  A stalemate insued, so a compromise was reached.  Wu writes that this compromise would later become Title II of the DMCA, which states that companies are protected by a "notice and takedown" system.  This means that all a site has to do to comply with copyright laws is take down infringing material at the request of the copyright holders.  Therefore, YouTube only needs to quickly takedown any material after notified to avoid legal issues. 

Wu does mention that this provision is not 100% "air-tight" noting that if YouTube knows there is infringing material on its site and fails to act, it may be liable in court for the infringement.  Wu then describes the difference between Napster and YouTube, saying that if the Internet were a red-light district, Napster would be the "pimp" and YouTube the "hotel".  He says that while Napster, like a pimp, is a means of getting illegal things and nothing else, YouTube is like the hotel in that they only "provides the space for people to do things, legal or not".

Brian P. Wilkner discusses in this article the effects of the Sony v. Universal and MGM v. Grokster on the newest batch of cases that will "pit mainstream, consumer-participation-oriented companies against copyright owners".  The article gives background information on both the Sony and Grokster cases and talks about the contributory liability doctrine, and how the Sony decision limited the power of this doctrine by stating that Sony's VCR had significant non-infringing uses.  On the other hand, it noted the Napster and Grokster cases which found each music file sharing company guilty of copyright infringement, and therefore were illegal.  Napster's fatal flaw, writes Wilkner, was the fact that they had a centralized indexing system that gave the creators of Napster too much knowledge of what was actually being shared on their website.  Grokster attempted to circumvent this problem by creating a decentralized index which "deprived their creators of any knowledge of infringing activity".  The Supreme Court ultimately ruled against them, saying that companies that distribute a device with clear intentions of promoting copyright infringement were illegal, and that Grokster's claim that they were unable to stop copyright infringement from taking place demonstrated an "unlawful objective".  One of the interesting tidbits about the Grokster case was that the court did not rule on the limits of the Sony decision, as many court observers thought they would.

Wilkner then goes on to talk about "inverse Grokster scenarios",  which he says will "pit content owners against legitimate organizations seeking to capitalize on the demand for interactivity".  Companies like Google, MySpace, and YouTube, he states, will not make statements or take actions to promote copyright infringement, but will maintain day-to-day operations with the knowledge that some copyright infringing content is being viewed or placed on their sites.  This is in direct contrast with Grokster, which claimed ignorance by stating it was unaware of any infringement taking place on its site.  The article ends with Wilkner proposing a "test" of the inverse Grokster dilemma in which the courts will have to decide whether the public benefit from these sites outweighs the property rights of copyright holders. 

Amanda Bronstad in this article writes about the differences between the copyright infringement cases that ultimately doomed music file sharing sites like Napster and Grokster and the current batch of cases involving video sharing sites like YouTube.  On one side of the argument, video sharing sites say that a major percentage of their content is perfectly legitimate and legal.  Also, these sites, especially YouTube, point out that they remove content considered to be copyright infringing immediately after they are notified by the copyright holder.  This did not happen with music file sharing sites. However, lawyers for Hollywood's major studios say that their case is bolstered by the fact that they now have a precedent in MGM v. Grokster.  They argue that web sites know they make money off of this infringing material, and therefore are liable for induced infringement.  They also say that video sharing sites may be considered direct infringers because of the role these sites take in editing user content.

Bronstad also notes that while the recent agreements between YouTube and major studios such as Universal, Warner, and CBS does help legitimize the site, the agreements aren't necessarily "suit proof".  She says that many experts in the field see a major gray area that could be exploited by an ambitious company or law firm.  She says that the debate will ultimately come down to the DMCA's "safe harbor provision", and whether or not these video sites have put in place and enforced rules to protect themselves from future legal issues.  She says that the strongest safe harbor these companies have is the ability to remove copyright infringing material from their sites.  If sites continue to consistently remove copyright infringing content, as YouTube has done over the last few months, then these companies will have a strong legal foundation for their business models.  

 

    This article is a guide to how DRM controls the market place.  The article shows how music services that consumers pay for give their customers less than they promise because of copy protection and the DMCA.  The guide explains the restrictions of various music services and how the services cover these up through marketing.  The first service is iTunes.  Even though you purchase the music through Apple, iTunes can change the DRM whenever they want, thus they can change and limit what you can do with music that you own.  Apple also limits first sale, backing up, remixing, player compatibility and format conversion.  Even though you own the song, the DMCA allows Apple to control the music that you purchase and restrict your uses of it.  
Microsoft’s “Play for Sure” claims that Windows Media Player’s DRM allows you to choose your music and devices.  However, there are still severe restrictions because of DRM.  There are very few players that are compatible to play with the WMA DRM format.  If you want to use a player that does not support WMA content, you have to repurchase your library of music.  Even though Microsoft markets their DRM as user friendly and non-restrictive, it is more to make DRM a norm than the truth of the matter.
RealNetworks markets their services as compatible with any MP3 playing device.  This in fact is not true, because music purchased through RealNetworks only plays on devices that support their DRM or the WMA format, thus limiting the players that the songs can be played on and restricting use of their music. RealNetworks, like iTunes, limits the number of times you can burn a song as well as the number of backup copies that can be made.  They reserve the right to modify their DRM and what it controls.  RealNetworks also does not allow reselling or remixing songs purchased through them.
Napster 2.0 advertises itself as a service that allows you to have all the music you want in anyway that you want it.  It offers three services and all charge more for uses that were once free.  Napster Unlimited allows you access to all the music you want until you stop paying the monthly fee.  You also have to pay if you want to put it on a device, which can only be one that supports WMA.  It also costs money to burn it.  The DRM restrictions can change, you can only backup a limited amount of times and burning is restricted.
    I will use this article as an example of how companies use DRM to exploit the music market place.  Each service limits the music they sell so that it can only be used with products that they license.  They also limit what a person can do with the music, even things that are traditionally acceptable under copyright law such as making back up copies and the first sale doctrine.  This article shows how the DMCA changes traditional copyright laws and allows companies to exploit their customers.

The XM Radio homepage provides information on the pricing, content, and functionality of the largest Satellite Radio broadcaster in America.  Two channels include Sonic Theater and Old Time Radio, specializing in radio drama content.  XM Radio follows a monthly payment scheme to fund the numerous commercial-free stations it offers.  XM Radio is experimenting with a partnership with Napster.