Contact FreedomWorks

400 North Capitol Street, NW
Suite 765
Washington, DC 20001

  • Toll Free 1.888.564.6273
  • Local 202.783.3870

Press Release

    Tech Bytes - Tid Bits in Tech News: The Future of 'Intellectual Property' is Now

    10/03/2000

    Yesterday, a three-judge panel of the 9th Circuit Court of Appeals heard oral arguments in the Recording Industry of America’s (RIAA) copyright infringement suit against Napster. The court will decide whether to uphold an injunction issued by District Court Judge Marilyn Patel, which would shut down the file-sharing website. The injunction was stayed to allow the site to continue operations until today’s panel was able to rule.

    According to reports inside settlement talks between Napster and individual record labels, money does not seem to be the driving force behind negotiations. In fact, reports indicate that the recording industry views negotiations as inimical to their fundamental interest in this case—a strong precedent for the expansion of copyright law in the digital age. RIAA members view Napster as a “business based on piracy.” It has always been difficult to explain how Napster could succeed without a subscription fee. However, such a fee could only be charged if the company achieved success with independent artists or reached a licensing agreement with a major record label.

    However resolved, the Napster case will have a great effect on the future of “intellectual property” jurisprudence. Such monumental significance demands that courts and legislators re-examine copyright’s original intent and statutory evolution.

    Napster has failed to produce any notable artistic success stories. Although the website promotes unaffiliated artists, the file-sharing software’s efficiency makes discovery of new artists rare. The software is designed to find specific tracks, or specific artists, on the computers of other users connected to the system. The user then selects and downloads the .mp3 (compressed music) file.

    The peer-to-peer network that Napster facilitates has a remarkable amount of music content. Obscure bands, performances, and music genres can be accessed at ease. Yet, this efficiency seems to curtail new music discovery—at least in the software’s current form—because the user must be familiar with the content before it is downloaded.

    With no evidence of artistic development, and software that makes it improbable, Napster’s dreams of profitability seem to depend on the success of negotiations currently underway with individual labels.

    If Napster charged a subscription fee of only $4.95 a month, it could pay record companies an estimated $500 million in 2001. That figure increases to over $700 million if the fee is $6.95. The $14 billion in compact disc (CD) sales this year may dwarf these figures, but as recent studies indicate, Napster has had no effect on CD sales thus far.

    So why would the RIAA balk at such a profitable revenue stream? Because this case has much less to do with money than it does “intellectual property.” If Napster is allowed to succeed, the RIAA argues, it will set a precedent for digital transfer of “intellectual property” that violates the guarantees made to copyright holders. Under this scenario, if insurgents could attract enough traffic to their site, the RIAA would have no recourse but to agree to some sort of licensing contract. This would greatly weaken the industry’s bargaining position and encourage competition in content and distribution.

    Copyright was intended to “promote the useful arts” by placing restrictions on what free people may do with their pens, presses, and other devices. Since the drafting of the Constitution, uncertainty has abounded as to what is and is not the exclusive right of copyright holders; the promise of payment was intended to incite creativity, but the practical arrangement that would balance public interest was left to Congress.

    Since 1789, Congress has progressively expanded copyright. In many instances, this expansion has come at the price of individual liberty. An expansion of copyright in the digital age could lead to further limits on freedom as its vigorous enforcement would compromise the privacy of individuals, limit the “fair use” of CDs and DVDs, and curb content options.

    However resolved, the Napster case will have a great effect on the future of “intellectual property” jurisprudence. Such monumental significance demands that courts and legislators re-examine copyright’s original intent and statutory evolution. Such scrutiny should produce a result that correctly views copyright as a delicate balancing act between individual liberty and artistic encouragement.