Some weeks ago I received an email from Peter Platzer (OJ), my Section Tech Rep, warning us that the use of HBS infrastructure to download, distribute or share copyright-protected files represents a Community Standards violation.
Peter’s email was a clear invitation to stop using file-sharing applications, such as Napster, which was shut down some months ago, Gnutella, BearShare, Filetopia and many others. I believe that almost all of us know how these applications work and have thought about this issue of digital music copyright protection at least once. While reflecting on it, I happened to notice that my wife, Giuliana, who has a law degree, was reading some documents about Napster’s lawsuit, which ended with a settlement for $26 million. To better understand the legal issues related to the Napster case, I asked my wife to bring me as a guest to the class “Internet and Society,” that she is taking at the Harvard Extension School.
I don’t have any legal background but here is what I learned. Napster was sued by various record companies and some artists for “contributory and vicarious infringement” of copyright laws. “Contributory” means that Napster was aware and materially contributed to the infringement of copyright laws by its users. “Vicarious” means that Napster had the right and ability to control its users and derived financial benefit from the infringement.
Napster’s defense was based on the notion of “fair use.” The argument was that Napster’s users did download and share copyright-protected files but for fair, non-infringing uses such as sampling songs before buying CDs and, above all, “space shift,” which means that I have the CD but then I want to have the songs on my laptop in order to be able to listen to them wherever I go. The “space shift” argument was similar to the “time shift” that Sony used in 1984.
The Sony – Universal Studios is a landmark case, in which Sony was allowed to keep producing and selling VCRs because the main use of VCRs was not-infringing, it was for “time shift,” I record a program to be able to see it later at my convenience. There is no market distortion associated to this use.
Is Napster so different from Sony?
The Court did think so. Two of the main reasons behind the injunction to Napster to suspend the fruition of the file sharing applications were: a large percentage of the use is actually “unfair;” and copyright-infringing and the distortion effect on the music market is big. This last point was proved by a study provided by the record companies even though Napster’s lawyers presented a study with different results. Technically, Napster was not found “guilty” but “likely guilty” of copyright infringement.
One last point is absolutely crucial: Napster lost because of the structure of its file-sharing applications, which is based on a central Napster server. Even though there are no actual songs on the server, there are all the lists and lookup tables of the shared songs available for download. The existence of the central server gives Napster knowledge and ability to control every transaction done by its users.
The newer file-sharing applications adopt a different model. They are purely “peer-to-peer.” You download a software and then you can share the files without ever accessing a central server.
Recently record companies have sued companies, which use these kinds of peer-to-peer file sharing applications. What will the outcome of these lawsuits be? We don’t know but we know that it will shape the discussion about copyright laws and the evolution of the music market in the years to come.
