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Hey, RIAA and MPAA, Time to Shift Gears

Hey, RIAA and MPAA, Time to Shift Gears
December 22, 2008

Friday’s news that the recording industry plans to stop its much-derided practice of suing individuals who download music illegally, while welcome, does not in any way signal an end to the entertainment industry’s policing efforts against students and, by extension, their colleges. But because of a subtle change happening right now on college campuses, the content industries and communication companies have a unique opportunity right now to preserve copyrights and make a lot of money – and it is an opportunity that may not come again.

The passage of the Digital Millennium Copyright Act (DMCA) coincided with a large shift in the number of students who brought desktop (and later laptop) computers to campus. A few years later, cellular phones went mainstream and quickly and were quickly adopted by students. Shortly after Napster debuted in the summer of 1999, the recording industry sought to protect its right to profit from the music in which it had invested substantial sums of money. Although the law was not strictly written to address this purpose, the industry used DMCA infringement notices to request that commercial and university internet service providers (ISP) remove infringing content. The industry also successfully sued Napster, all but putting it out of business.

Unfortunately for the recording industry, the death of Napster spawned many other illegal file-sharing services. Since, like Napster, many of these services were open source, as soon as one was taken down, enterprising individuals could tweak the source code and launch another application. The services spread virally on campus and off, and became more and more sophisticated.

After a spate of bad press for lawsuits against sympathetic defendants like grandmothers and young children illegally file-sharing on commercial ISPs, the industry turned its attention to illegal sharing on college campuses. Some institutions received no DMCA notices, while others have received hundreds of such notices each year. Notices are generally taken seriously by colleges that receive them and it takes significant staff time to investigate and counsel the accused students. Notices come from the RIAA, the MPAA, and myriad other intellectual property owners. Recently, in fact, colleges were handed additional responsibilities by means of amendments to the Higher Education Act.

While the RIAA has now abandoned its strategy of bringing lawsuits against individual users (mostly college students of late), it apparently will continue to send DMCA takedown notices to college campuses. While the subpoenas and lawsuits against individual students have garnered most of the press in this area, many colleges find following up on the much more common DMCA notice to be far more time consuming and expensive than responding to the less common subpoena. One problem with asking colleges, and now commercial ISPs, to police illegal file-sharing is the constant arms race between file-sharing programs and the programs that seek to prevent the trade. Blocking programs often find themselves a step behind open-source sharing programs and the creative programmers who add encryption and other technology. Even if ISPs are simply asked to respond to notices of infringement, this arms race will result in most file sharers not being caught.

The content-producing industries, and especially the RIAA, are regularly criticized for favoring lawsuits and DMCA notices over changing their business model to meet the times. While some of this criticism is valid, some of it is unfair as the industry is desperately searching for new alternatives, and its new stance may be a start.

Yet its inherent conservatism stops it from making the fundamental shifts that can help it survive and thrive in the digital marketplace. In recent conversations at conferences with industry insiders, I have heard two schools of prevailing thought. On one hand, executives at recording companies, television companies and movie studios are spending a significant amount of time looking at new partnerships and business models that will help replace lost profits. One high-placed executive told me that he and his team now spend most of their time trying to create their way out of this issue rather than sue their way out. Yet at the same time, another executive told me at a recent conference that the staggering amount of file-sharing found by the Digital Citizen Project has convinced him that his industry needs to send more takedown notices, not fewer.

Outside of the legal sphere, the 10 years since the DMCA and Napster broke onto the scene saw the mainstreaming of computers on wired and wireless networks. Yet the way students access educational and entertainment content is changing rapidly. A long time ago, in technological terms anyway, (circa 1997–2003), a student would use television, radio and computers for entertainment, use a desktop computer to read and write educational content, and use a cell phone (if they had one) as a telephone.

Somewhat more recently (circa 2004-2007), a student might use a laptop as the primary method for communication and accessing educational and entertainment content, while using a cell phone primarily for calling and text messaging. Now, however, we are moving quickly toward a model where students will use a "smart phone" for almost all tasks: calling, text messaging, accessing the Internet, accessing music and increasingly television and movie content, as well as reading (and sometimes writing) documents.

For students, the computer is becoming like the convection oven while the mobile device is the microwave. When the whole family comes over for a holiday dinner, you cook in the nice, big convection oven. For the daily meal on the go, however, you “nuke” the food in the microwave. So too students are increasingly using handheld mobile devices to do all or almost all of their daily interaction with the Internet. They turn to their laptop to watch movies on a larger screen or to research and write term papers. Many fans of music and movies currently use their computer as a way station for content. They download (legally or illegally) content to their computer, and then transfer that content to their phone, iPod or other portable device.

This shift to mobile devices has several effects on the issue of students who illegally share files. First, colleges and universities have no ability to track such use, prevent illegal file-sharing, or discipline students for violating the copyright law or even their own code of conduct. That means that the student who uses his or her laptop on their campus network is treated differently from the student next to them doing the same action on a Blackberry.

Second, as colleges and universities take stronger steps to prevent illegal file-sharing on their networks, such as dialing down bandwidth, packet shaping, and installing software and hardware to block the transfer of copyrighted files, more and more of the students who seek to illegally share such files will partially or completely abandon the campus wired and wireless infrastructure altogether. As the cost of wireless access cards for laptops drops (and as technical standards allow computer companies to install such cards when manufacturing the laptop) and the speed of cellular Internet access increases, a growing percentage of the student population will opt for wireless Internet access (for both their laptop and their mobile device) through their cell phone carrier rather than through their college. At that point, piling dozens or hundreds of DMCA notices on colleges will be less effective in solving the illegal file-sharing problem and protecting the content industry’s copyrights.

This coming shift allows for a solution, however, albeit one with a short window. The content industry should quickly collaborate with cellular telephone companies to provide content access plans through mobile devices. As more people shift away from their laptops as a primary device and toward their mobile devices, they will want to access content directly through such devices. This presents the content industry with a business opportunity. Before sharing music, movie and television files illegally among cellular phones becomes commonplace, as it has on wired and wireless computer networks, the industry should offer cellular subscribers the opportunity to access content on-demand for an add-on fee to their cell phone plan.

Such a direct access program would be significantly more efficient for the average user. Allowing individuals to access such digital content on their mobile device quickly, and for a reasonable price, will allow them to “cut out the computer middle man” and truly enjoy this content “on demand.”

In offering such a service, the content industry could replicate one of its success stories in the digital arena. When cell phones first came out, their rings sounded like, well, telephone rings. But a few years ago, cell phone companies began offering customers the option of purchasing ringtones and ringbacks (callers to your phone hear a song instead of a ring). Millions of these ringtones and ringbacks have been purchased. The artists are compensated, subscribers get a service they desire for a low price (usually one or two dollars), and, although possible, there is less incentive to steal such tones. It is so easy and inexpensive to purchase such services that there is less incentive to obtain illegal files. Additionally, there is no instant cost as most ringtones and ringbacks are simply charged to the user’s (or his or her parent’s) monthly cell phone bill.

Ringtones and ringbacks parallel two other add-on success stories for the cell phone industry. When text messaging first came out, most individuals used the service sparingly, if at all. My personal plan featured a charge of 2 cents for each message received and 10 cents for each message sent. Fairly quickly, however, the phone companies began offering plans that included hundreds or thousands of complimentary messages each month, or even unlimited messaging, all for a moderate additional cost over base service. In just a few years, we went from a system where people would send messages only in emergencies, to a system where high school and college students routinely send and receive thousands of messages each month. In fact, billions of such messages are sent each month. Similarly, when Internet access on telephones arrived, the companies began offering plans where, for a flat monthly fee, subscribers can access the Internet by phone with few or no limits.

The cell phone companies and content industry should team to offer such a service for songs, television shows and movies. The less desirable (but more likely plan) would be to offer users an “iTunes” for the phone, on which they can access, wirelessly and on-demand, any song, movie or television program for a nominal fee to be added to their monthly bill.

If the companies make such access easy enough and inexpensive enough (while providing quality files that sound and look clear), individual users will have little or no incentive to obtain such files illegally. Over time, however, the companies should develop unlimited plans in which, for a charge of $10 or $20 per line, individuals can access unlimited content on their mobile device at any time. This content can be offered with sufficient digital rights management software such that it can only be played on the subscriber’s phone. Here, artists and content producers are guaranteed a steady stream of income (even if less than they received in the best years of VHS, CD, and DVD production), and individuals can access any content they want at any time. Content producers cannot survive without individuals who willingly pay for their wares. But if illegal downloading puts companies out of business, there will be less innovative content to purchase.

The current system of content producers asking colleges to police file-sharing and protect its rights is ineffective now (at best it targets a tiny percentage of illegal file-sharing), and will become less effective as more people move to mobile devices for content access. It will have no effect at all if students move away from campus networks and toward cellular-network PC cards so as to avoid strict rules on illegal downloading. Companies should cut their losses from illegal downloading on personal computers and head to the next frontier -- the mobile device as the all-purpose media-access machine.

As we approach the 10th anniversary of Napster’s founding, let’s transcend the market for such programs together, once and for all.

Bio

Joseph Storch is a lawyer in the State University of New York’s Office of University Counsel. In addition to campus representation, he concentrates his practice on the legal issues surrounding emerging technologies. The views expressed here are his own and do not necessarily represent the views of the State University of New York.

 

 

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