1. Port 21 (Distribution and Promotion Remix) Brian Geoghagan Winter 2005 COM546 Professor Gill

2. Back In The Day (c.1995)  Pre-Broadband  Hard Drive space appx. $1 per megabyte  MP3 encoder and player released June ‘95 by The Fraunhofer Society  3min Uncompressed = 90min  3min Compressed (MP3) = 9min

3. 1999  $0.17 per MB (20GB = $300)  Broadband rapidly spreading  Increased Internet usage  Winamp MP3 player  Increased acceptance of MP3 technology

4. Napster  Shawn Fanning  October 1999  Centralized Servers  50-70 Million Users

5. Legal Debate  R.I.A.A. vs. Napster (December 1999)  Contributory Infringement – knowingly encouraging infringing activity.  Vicarious Infringement – violation occurs when operator has the ability to supervise users, but chooses not to for financial benefit.  Metallica/Dr. Dre vs. Napster (April 2000)

6. Napster’s Defense  Fair use  Sampling  Space Shifting  Permissive Distribution  Non-Commercial & Non-Profit Use  Does not copy, record, encode or transfer MP3 files  American Home Recording Act (AHRA)  Allows recording copyright protected material for personal use

7. Metallica vs. Napster

8. The Settlement  Mutually beneficial  300,000 users banned from Napster  Temporary injunction shuts down Napster  Napster not solely reliable for copyright material on servers  Shared liability with Artists/labels  Must notify Napster of copyright protected files  36hrs to remove files

9. R.I.A.A. vs Napster  AHRA not applicable because computer is not recording device  Religious Technology Center versus Netcom On-Line Communication Services.  ISP responsible for copyright infringement if they know of infringement and have the ability to remove the protected material  Sony v. Universal  Legal use of VCR trumps illegal use  Sony cannot control what consumers use the VCR for in their homes, therefore not liable for any copyright infringement  Time-shifting constitutes Fair Use

10. Decision  regardless of the number of Napster’s infringing versus non- infringing uses…plaintiffs would likely prevail in establishing that Napster knew or had reason to know of its users’ infringement of plaintiffs’ copyrights  File sharing harms copyright holders ability to make money from the same material.  File sharing is commercial use because users get something for free they would have had to pay for.

11. Further Studies  Didn’t factor increase in video game & DVD sales  Fewer major releases  Felix Oberholzer and Koleman Strumpf  Tracked Downloads from file sharing networks and RecordScan sales during 2002 and found file sharing had an impact “indistiguishable from zero”  File sharing results in net-increase in music consumption  Lower cost increases audience size  Magnitude of file sharing increases social welfare

12. Future  Success of iTunes Music Store and portable MP3 players clearly shows room for growth in digital download market  SoulSeek and other P2P Networks  New modes of sharing  MP3 Blogs  BitTorrent  Web based file sharing services (yousendit.com, rapidshare.de)  Hype Machine reports 400 sales through iTunes and Amazon in October.

13. Questions?