The Digital Media Crisis
Cyberlaw and the Global Economy
Harvard Law School
John Palfrey
Berkman Center for Internet & Society at
Harvard Law School, October 14, 2004
Segue: from ™ to ©
• OPG v. Diebold case example:
- When copyright hits political
speech
- Brand implications
Problems
• Music:
– Napster -> Grokster (-> Napster 2.0)
• Movies:
– They know they’re next.
• Broadcast:
– Related problems, especially fearing lost
advertising from TiVo and the like.
• Unifying theme:
– Loss of control in the digital environment.
Hard Questions
1. What’s the interplay between copyright and
contract law, DRM, and evolving digital media
business models such as Apple’s iTunes?
2. What are current regulatory alternatives?
What are the interactions under, e.g.,
European and Asia-Pacific legal systems?
3. What’s the impact of a given business model,
such as Apple’s iTunes, on consumers, artists,
labels—and the public at large?
iTunes, e.g.: Interplay
•
Copyright-Contract Intersection
– iTunes uses contract and/or copyright law to
govern the actions consumers may take
– Why control copyright through contract?
•
•
•
Protect/buttress DRM
Price efficiently
Encourage vendors
– iTunes attempts to contract out of resale
rights, reverse-engineering, certain (other)
fair uses
iTunes, e.g.: Technology
•
Digital Rights Management
– FairPlay intended to prevent piracy and,
foremost, limit interoperability (controlling
secondary markets)
– Prevents users from certain “fair” uses
– Not interoperable with other similar
technologies (are any such technologies
truly going to be interoperable?)
– So what if you buy thousands of songs, then
want to switch?
iTunes: Interplay, Cont’d
•
First Sale
–
–
•
Application to digital works distributed over the
Internet (under current International, U.S., and
European law)? Most likely: No.
Generally: iTunes’ Terms of Service & FairPlay
override first sale “rights” anyway
Fair Use
–
–
Creative Users: Terms of Service and FairPlay
exclude transformative uses
Passive Users
•
•
Some other (fair) uses supported, e.g. use on three
computers, unlimited number of iPods, etc.
Some others not (e.g. no back-up copy of the music library)
Comparative Law Analysis
•
Trend towards convergence:
–
–
–
•
Contract law often overrides rights consumers
would otherwise enjoy under copyright law
Emergence of DMCA-like legislation around the
globe
Digital First Sale largely denied
However, significant differences remain:
–
–
–
–
Anti-circumvention provisions: differences in detail
(e.g. in Europe regarding “access control”)
Different implementations of fair use rights
Consumer protection laws
Enforcement: “Law in books” versus “law in action”
Tentative Assessment
•
Impacts on consumers:
–
–
Positive: Ease-of-use, broad song catalog, PPD
Negative: Fair Use and first sale limited via DRM
(self-enforcing, rigid) and contract law
•
•
•
Problematic, e.g., with regard to movies or e-books
Standard setting effect of iTunes?
Potential impacts on artists:
–
–
–
Difficult to evaluate: lack of disclosure
Most likely: No significant changes in revenue
streams, although efficiencies created by online
distribution
Potential benefit of independent artists: Greater
exposure
Assessment cont’d
•
Potential impacts on labels:
–
–
–
–
–
Again, data problem
iTunes as an attempt to re-build new structures for
selling copies in Post-Napster-World
Online distribution eliminates costs
Independent labels might benefit, too
Might require adjustments of long-standing licensing
practices (e.g. staggered release dates in Europe)
Asia-Pacific Trends
• BCIS team members, including former Cyberlaw/Global
student Renny Hwang, researched major trends
regarding legal developments with digital media content,
file-sharing and P2P services in major Asia-Pacific
jurisdiction. Jurisdictions targeted: Japan, China,
Taiwan, Korea, Australia, India
• In general, the trends have closely mirrored
developments that have occurred in the United States
• Key trends:


(1) Increasing litigation against peer-to-peer (P2P) file-sharing
services and websites in the Asia-Pacific jurisdictions
(2) In response to the popularity as well as legal challenges of filesharing networks, legitimate online music services similar to
iTunes are beginning to proliferate
Asia-Pacific Trends
Trend #1: Increasing litigation against P2P services
China: government-involved
• 2000: Interpretation – unauthorized file sharing =
copyright infringement
• Music Copyright Society,
copyright holders have filed
suits against websites, ISPs
Taiwan: business-focused
• 2002-03: IFPI sued P2P
services and end-users
• 11/03: Case settled against
P2P end-user
• Government promoting
cooperation between
copyright holders and P2Ps
Korea: advanced litigation
• 2003: civil and criminal
charges brought against
P2P network: copyright
infringement found for
centralized, but not
distributed network
Japan: litigation-focused
• 2001: P2P network liable
for copyright infringement
• 2003: P2P users arrested
for copyright violations
Australia: govt litigation
• 2003: P2P network liable
for copyright infringement
• 2003: suits brought
against ISPs
Asia-Pacific Trends
Trend #2: Proliferation of iTunes-type online music services
Japan:
• Currently have domestic
online music service (Sony)
• Both iTunes and Napster
plan on expanding into
Japan by 2004
India:
• 11/03: Mercora launch:
• Subscription P2P
file-swapping service
• MSFT and Real
Networks DRM
• 99 cents / song
• 11/03: Bollywood film
distributed via Kazaa at
$2.99 / download
Taiwan:
• P2P companies and other
companies negotiating with
record labels
•12/03: iBiz music service:
• Deals w/ 14 labels
• Proprietary DRM
• Less than $1 / track
• ISP, Acer and 5 other
companies also planning to
launch sites
Australia:
• 12/03: leading telecom
company will launch new
online music service
• Deal with Warner
• MSFT DRM
• $2 / track, added to
Internet service bill
5 Possible Future Scenarios
• The No-Change Scenario assumes that confusion
remains about doctrines like "fair use" and "first sale" as
the DMCA and copyright law continue to guide digital
media distribution.
• The Technology Speed-Bump Scenario forecasts
that technological restrictions like encryption will create
small barriers to users' access and control of digital
content.
• The Technology Lockdown Scenario projects that
restrictive digital rights management (DRM) schemes will
unilaterally determine users' experience of the content
they purchase. There might be competition as among
technology providers.
5 Scenarios, Cont’d.
• The Alternative Compensation System Scenario
imagines that users access digital content
through a state-run system that would
tax consumers according to use and reward
creators according to the popularity of their work.
• The Entertainment Co-op Scenario envisions
that voluntary associations emerge within the
existing copyright structure to allow distribution
of digital content between subscribers and
creator.
Berkman Center for Internet & Society
Harvard Law School
Data from the Digital Media Project
http://cyber.law.harvard.edu/media
JohnJohn
Palfrey
Palfrey
& Urs Gasser
February
October
2, 2004
14, 2004