1. Legal Alternatives for Online Music Distribution CNI-Portland December 9, 2003 Steve Worona EDUCAUSECNI-Portland December 9, 2003 Steve Worona EDUCAUSE

2. 2 Joint Committee of the Higher Education and Entertainment Communities Formed Fall, 2002 “To examine ways to reduce the inappropriate use on campuses of P2P file sharing technologies.” “To discuss their differences on federal intellectual property legislative issues.” www.educause.edu/issues/rfi Formed Fall, 2002 “To examine ways to reduce the inappropriate use on campuses of P2P file sharing technologies.” “To discuss their differences on federal intellectual property legislative issues.” www.educause.edu/issues/rfi

3. 3 Membership: Higher Education Graham Spanier, Penn State, co-chair Molly Broad, UNC John Hennessy, Stanford Chuck Phelps, Rochester Dorothy Robinson, Yale Staff: Mark Luker, EDUCAUSE Shelley Steinbach, ACE John Vaughn, AAU Graham Spanier, Penn State, co-chair Molly Broad, UNC John Hennessy, Stanford Chuck Phelps, Rochester Dorothy Robinson, Yale Staff: Mark Luker, EDUCAUSE Shelley Steinbach, ACE John Vaughn, AAU

4. 4 Membership: Entertainment Industry Cary Sherman, RIAA, co-chair Roger Ames, Warner Music Group Matthew T. Gerson, Vivendi Universal Sherry Lansing, Paramount Pictures Irwin Robinson, NMPA Jack Valenti, MPAA Staff: Fritz Attaway, MPAA Troy Dow, MPAA Mitch Glazier, Vivendi Universal Bruce Block, RIAA Bruce Block, RIAA Barry Robinson, RIAA Jonathan Whitehead, RIAA Cary Sherman, RIAA, co-chair Roger Ames, Warner Music Group Matthew T. Gerson, Vivendi Universal Sherry Lansing, Paramount Pictures Irwin Robinson, NMPA Jack Valenti, MPAA Staff: Fritz Attaway, MPAA Troy Dow, MPAA Mitch Glazier, Vivendi Universal Bruce Block, RIAA Bruce Block, RIAA Barry Robinson, RIAA Jonathan Whitehead, RIAA

5. 5 Purpose and Scope “We will seek ways to reduce the inappropriate use of P2P technology without restricting free speech and expression, invading privacy, or limiting the legitimate uses of P2P. The systematic implementation of thoughtful programs of education on copyright rights and responsibilities and appropriate and inappropriate uses of P2P technologies should be a central component of such actions. The development and application of carefully crafted policies and procedures for network management can also reduce inappropriate uses while preserving appropriate uses of those networks. As always, universities will respond appropriately to all legal requirements.”

6. 6 3 Task Forces Education John Hennessy, chair Developing white paper Legislation Molly Broad, Jack Velenti, co-chairs Developing statement of principles and goals Technology Chuck Phelps, chair Dave Lambert, Georgetown Michael McRobbie, Indiana U Staff: Mark Luker 2 RFI’s Education John Hennessy, chair Developing white paper Legislation Molly Broad, Jack Velenti, co-chairs Developing statement of principles and goals Technology Chuck Phelps, chair Dave Lambert, Georgetown Michael McRobbie, Indiana U Staff: Mark Luker 2 RFI’s

7. 7 ProductsProducts To date Letter from David Ward on the P2P issue White paper on student liability Reports to House Judiciary Subcommittee Report on RFI-1 Letter from Graham Spanier on pilots To come “Best practices” policies and procedures Report on RFI-2 Legislation “principles and goals” To date Letter from David Ward on the P2P issue White paper on student liability Reports to House Judiciary Subcommittee Report on RFI-1 Letter from Graham Spanier on pilots To come “Best practices” policies and procedures Report on RFI-2 Legislation “principles and goals”

8. 8 RFI’sRFI’s Producing a “knowledge base” from vendor data The company The product Technology, service, pricing, history,… Reviewed by reps from each community Not evaluating products Facilitating/soliciting pilots RFI-1 Technologies/services for Limiting bandwidth Limiting infringement RFI-2 Services offering “legitimate” distribution Producing a “knowledge base” from vendor data The company The product Technology, service, pricing, history,… Reviewed by reps from each community Not evaluating products Facilitating/soliciting pilots RFI-1 Technologies/services for Limiting bandwidth Limiting infringement RFI-2 Services offering “legitimate” distribution

9. 9 Responses to RFI-1 Akonix SystemsNetintact Allot CommunicationsPacketeer ApreoPalisade Systems Arbor NetworksPancho Networks AudibleMagicQ1 Labs BayTSPRanger Online Ellacoya NetworksTransparency Software Exploit SystemsUniversal Music Group/Vivendi FutureSoftXACCT Technologies Global Velocity Akonix SystemsNetintact Allot CommunicationsPacketeer ApreoPalisade Systems Arbor NetworksPancho Networks AudibleMagicQ1 Labs BayTSPRanger Online Ellacoya NetworksTransparency Software Exploit SystemsUniversal Music Group/Vivendi FutureSoftXACCT Technologies Global Velocity

10. 10 Responses to RFI-2 AT&T America Online Cflix College Entertainment Network Movielink Music Public Broadcasting MusicNetMusicRebellionMusicmatchNapsterPeppercoinRealNetworksWebHoundAT&T America Online Cflix College Entertainment Network Movielink Music Public Broadcasting MusicNetMusicRebellionMusicmatchNapsterPeppercoinRealNetworksWebHound

11. A Tale of Two Campuses

12. 12 University of Florida:ICARUS Developed by VP for Residence Halls Automatic detection and enforcement of policy violations Policy: No file sharing/serving (including Web pages) Registering MAC addresses Monitoring all traffic flows looking for any P2P Turn off network access for all machines registered by “accused” violator Redirected to page describing violation and how to respond First offense: “Education” Second offense: 5 days off net Subsequent: Judicial system RIAA: A model to be considered by all campuses Use Lionshare for “legitimate” Peer-to-Peer Developed by VP for Residence Halls Automatic detection and enforcement of policy violations Policy: No file sharing/serving (including Web pages) Registering MAC addresses Monitoring all traffic flows looking for any P2P Turn off network access for all machines registered by “accused” violator Redirected to page describing violation and how to respond First offense: “Education” Second offense: 5 days off net Subsequent: Judicial system RIAA: A model to be considered by all campuses Use Lionshare for “legitimate” Peer-to-Peer

13. 13 Penn State: Napster Promoted/negotiated/championed by Graham Spanier “Site license” Free streaming, tethered download $1/track purchase Nominally $10/month/person 18,000 students in Spring 83,000 students in Fall Student reaction mixed What about blocking other P2P? Lamar Smith: “Today's agreement establishes Penn State as a leader in the fight against the illegal sharing of songs on peer-to-peer networks. If other colleges and universities take similar steps the widespread violation of intellectual property rights on campuses will be sharply reduced.” Promoted/negotiated/championed by Graham Spanier “Site license” Free streaming, tethered download $1/track purchase Nominally $10/month/person 18,000 students in Spring 83,000 students in Fall Student reaction mixed What about blocking other P2P? Lamar Smith: “Today's agreement establishes Penn State as a leader in the fight against the illegal sharing of songs on peer-to-peer networks. If other colleges and universities take similar steps the widespread violation of intellectual property rights on campuses will be sharply reduced.”

14. Discussion Questions

15. 15 The Appropriate Role for a Campus 1.Ignore it 2.Aggressively block P2P, even at the expense of eliminating non-infringing activity 3.Block/punish infringing activity, but avoid interfering with non-infringing activity 4.Work proactively to provide access to commercial content 5.Other 1.Ignore it 2.Aggressively block P2P, even at the expense of eliminating non-infringing activity 3.Block/punish infringing activity, but avoid interfering with non-infringing activity 4.Work proactively to provide access to commercial content 5.Other

16. 16 LicensingLicensing Back-of-envelope calculation 60 million file sharers $700M “lost revenue” in 2002 $1/month/sharer John Dingell: “60 million citizens can’t be wrong” Canada: “Tax” ISP’s Today: 20 million US households on broadband 1978: 60 million Some quotes… Back-of-envelope calculation 60 million file sharers $700M “lost revenue” in 2002 $1/month/sharer John Dingell: “60 million citizens can’t be wrong” Canada: “Tax” ISP’s Today: 20 million US households on broadband 1978: 60 million Some quotes…

17. 17 Proposals to Charge ISPs for Music Downloads An organization representing songwriters and other copyright holders in Canada is arguing to the Canadian Supreme Court for a tax on ISPs to compensate copyright holders for losses due to file swapping. A similar tax already exists for blank cassette tapes and CDs. Canadian telecommunications companies and ISPs are strongly opposed to the idea, saying they simply provide a mode of communication and should not be responsible for collecting “royalties” for the content that uses their networks. In the United States, the Distributed Computing Industry Association (DCIA) has floated a similar proposal, though the DCIA's goes further. Under its plan, ISPs would monitor network traffic and charge file traders a surcharge that would compensate record companies and other copyright holders. The DCIA model would make music content similar to that of cable television, where users could subscribe to certain “channels” of music. The DCIA, which represents peer-to-peer companies, hopes to offer a total of three possible business models for online music distribution, from which a “critical mass of ISPs, music companies, and software companies” can choose one to pursue. Proposals to Charge ISPs for Music Downloads An organization representing songwriters and other copyright holders in Canada is arguing to the Canadian Supreme Court for a tax on ISPs to compensate copyright holders for losses due to file swapping. A similar tax already exists for blank cassette tapes and CDs. Canadian telecommunications companies and ISPs are strongly opposed to the idea, saying they simply provide a mode of communication and should not be responsible for collecting “royalties” for the content that uses their networks. In the United States, the Distributed Computing Industry Association (DCIA) has floated a similar proposal, though the DCIA's goes further. Under its plan, ISPs would monitor network traffic and charge file traders a surcharge that would compensate record companies and other copyright holders. The DCIA model would make music content similar to that of cable television, where users could subscribe to certain “channels” of music. The DCIA, which represents peer-to-peer companies, hopes to offer a total of three possible business models for online music distribution, from which a “critical mass of ISPs, music companies, and software companies” can choose one to pursue.

18. 18 “…Artists have an obligation to support the rest of the artistic community by licensing their works. Music services have not been able to get licenses from superstar artists like the Beatles. When an artist refuses to license their work, I think that is a vote in favor of piracy instead of the legitimate marketplace.”

19. 19 “…Artists have an obligation to support the rest of the artistic community by licensing their works. Music services have not been able to get licenses from superstar artists like the Beatles. When an artist refuses to license their work, I think that is a vote in favor of piracy instead of the legitimate marketplace.” –Cary Sherman, October, 2003 “…Artists have an obligation to support the rest of the artistic community by licensing their works. Music services have not been able to get licenses from superstar artists like the Beatles. When an artist refuses to license their work, I think that is a vote in favor of piracy instead of the legitimate marketplace.” –Cary Sherman, October, 2003

20. 20 “ I take it as a basic premise that our copyright laws must play a role — a strong role — in protecting creative works over the Internet. These protections, however, must be secured in a manner which is mindful of the impact related regulation can have on the free flow of ideas that a decentralized, open network like the Internet creates. We must protect the rights of the creator. But we cannot, in the name of copyright, unduly burden consumers and the promising technology the Internet presents to all of us. … I think what we are hearing is that fair and reasonable licensing needs to take place. ”

21. 21 “ I take it as a basic premise that our copyright laws must play a role — a strong role — in protecting creative works over the Internet. These protections, however, must be secured in a manner which is mindful of the impact related regulation can have on the free flow of ideas that a decentralized, open network like the Internet creates. We must protect the rights of the creator. But we cannot, in the name of copyright, unduly burden consumers and the promising technology the Internet presents to all of us. … I think what we are hearing is that fair and reasonable licensing needs to take place. ” — Orrin Hatch, July, 2000 “ I take it as a basic premise that our copyright laws must play a role — a strong role — in protecting creative works over the Internet. These protections, however, must be secured in a manner which is mindful of the impact related regulation can have on the free flow of ideas that a decentralized, open network like the Internet creates. We must protect the rights of the creator. But we cannot, in the name of copyright, unduly burden consumers and the promising technology the Internet presents to all of us. … I think what we are hearing is that fair and reasonable licensing needs to take place. ” — Orrin Hatch, July, 2000

22. 22 The Long-Term Resolution for Internet-Distributed Music Will Be 1.Licensing, as is done for radio, with fees collected from ISP’s, infrastructure providers, etc. 2.Continued reliance on per-use, per-file, or other “by-the-drink” fees, with abuse controlled by hardware- and software- enforced DRM 3.Something else 1.Licensing, as is done for radio, with fees collected from ISP’s, infrastructure providers, etc. 2.Continued reliance on per-use, per-file, or other “by-the-drink” fees, with abuse controlled by hardware- and software- enforced DRM 3.Something else

23. 23 A Good Reference “Alternate Distribution Strategies for Digital Music” —G. Prem Premkumar, College of Business, Iowa State University, CACM v46 n9 September, 2003 “Alternate Distribution Strategies for Digital Music” —G. Prem Premkumar, College of Business, Iowa State University, CACM v46 n9 September, 2003