P-to-P backers propose new distribution models

A complete rewrite of the U.S. copyright system was just one proposal aired Thursday during a contentious series of panel discussions at a U.S. Federal Trade Commission (FTC) workshop on peer-to-peer technology.

The U.S. Congress should overhaul copyright law that allows a broken distribution model used by the music and movie industries to freeze out P-to-P services, a lawyer formerly in the music industry said at the conference, held in Washington, D.C.

A new digital transmission right for music, added to copyright law by Congress, would allow artists to get paid and consumers to have access to a wide range of music, said Bennet Lincoff, former director of legal affairs for new media at the American Society of Composers, Authors and Publishers (ASCAP).

The voluntary licensing model, administered through a collective of artists similar to ASCAP and other publishing organizations, would pay artists based on an online census of how much of their music is being traded and would encourage music companies to distribute their music as widely as possible, Lincoff said.

Others at the forum rejected Lincoff's idea, the subject of a paper published in November 2002, as a form of compulsory licensing that would require Congress, not free markets, to determine the value of a downloaded song.

"The problem with compulsory license (plans) as a solution to something like this, is they're all quite clumsy," said Stanley Besen, an economist and vice president of business consulting company Charles River Associates Inc. "They require someone to set the prices."

The two-day FTC forum included dueling studies on the effect of P-to-P file-trading on the music industry as well as opposing ideas about what the U.S. government should do about P-to-P vendors.

David Carson, general counsel of the U.S. Copyright Office, said his office was working on an amended version of the Inducing Infringement of Copyrights Act, a bill that would allow lawsuits against people who "induce" copyright violations, before Congress adjourned for the year. The bill failed to get to the U.S. Senate floor after opponents complained it was too broad, but Carson said the Copyright Office had proposed a version that would focus on the copyright-infringing products and services, not technology used.

Much of Thursday's session repeated old rhetoric that comes from both sides in the P-to-P debate. A representative of the movie industry used words such as "thievery" and "looting" to describe unauthorized file trading using P-to-P software. P-to-P software vendors can filter out pornography and viruses, but say they don't have the technology to filter out copyrighted content, said Dean Garfield vice president and director of legal affairs for worldwide antipiracy efforts at the Motion Picture Association of America (MPAA).

"Transformative technology has been highjacked, not by innovators, but by business people who are motivated by profit and who are so blinded by the chase for money that they fail to see the irony, the illogic and the incongruity of claiming to be technologists while asserting that their hands are tied by technological limitations," Garfield said. "Innovation is being retarded by those who leach on those who choose to create."

One P-to-P executive called on the MPAA and the Recording Industry Association of America (RIAA) to join P-to-P vendors to support an impartial study of whether copyright filters are feasible. Sam Yagan, chief executive officer of MetaMachine, distributor of the popular eDonkey P-to-P software, questioned how the music and movie industries could object to his desire to make money.

Yagan warned that future generations of P-to-P software will be fully encrypted and fully anonymous, distributed by programmers with no profit motive. "If you want to increase legitimate use of these networks, let us sell your products," Yagan said to the MPAA and RIAA.

Yagan also questioned legislative efforts focusing on current uses of P-to-P software because of rapidly changing uses of technology. "When we resort to these regulatory solutions, there's a chance we'll get it wrong," he said.

Other forum participants argued P-to-P software hurts the efforts of pay-per-download music services. Saying that P-to-P technology creates "black market networks," Jonathan Potter, executive director of the Digital Music Association trade group, said P-to-P vendors' business models create no added value for artists or consumers, other than allowing consumers to "get something for free."

Potter called on the entertainment industry to educate consumers about copyright violations, to provide compelling legal alternatives to current P-to-P service, and to continue enforcement efforts against violators. "Enforcement is perhaps not the only way to go," he said.

Potter also questioned why P-to-P vendors are surprised by lawsuits from the entertainment industry. "We should not give credence to people who play chicken with the law," he said. "There's not a lot of pity out there for people who invest (in P-to-P businesses) knowing the uncertainty in the law."

But Lincoff, the former ASCAP lawyer, said current legal download services often restrict how many times a song can be copied to other devices. That's why a digital transmission license is needed, he said.

"If the industry offered what consumers really want, the overwhelming majority would pay for it," he said. "If that's not true, then all surely is lost."

Consumers are now looking elsewhere because pay-per-download services don't give them unfettered control over the music they buy, he added. Meanwhile, the entertainment industry wants Congress to protect its outdated business model, he said.

"The industry has relegated consumer to black market services where adware, spyware, pornography and privacy invasions abound," Lincoff said. "The industry has no right to demand that public policy supports its desire to do business in a particular way."

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Grant Gross

IDG News Service
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