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Napster's heinous crime: independence

Intellectual property giants plot to control distribution

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It seems that Napster will never be allowed to bend over backwards quite far enough to appease the entertainment behemoths who want to see it shut down permanently. In February we reported that the embattled company would introduce a copy protection scheme with digital rights management outfit -- and Bertelsmann subsidiary -- Digital World Services to use copy protection in P2P swapping, to inhibit burning MP3s to CDs.

Also in February, the company offered a bribe of $1 billion to record labels, songwriters and independent artists in exchange for being permitted to continue drawing breath.

Then in early March the company installed filters to prevent users trading pirated music through its network, and even went so far as to ban Aimster's attempt to bypass them.

And still the entertainment industry, most notably the Recording Industry Association of America (RIAA), continues to insist that Napster is nothing short of a criminal syndicate. It's painfully apparent that the "copyright industry" as MPAA President Jack Valenti likes to call the Borg Collective of media behemoths which determines precisely what we will be entertained by and precisely how, when and where we shall be permitted to enjoy it, will simply not tolerate the existence of a distribution network which it can't control.

Another concession

With this history in mind, we have every reason to expect that an additional scheme introduced by Napster Interim CEO Hank Barry during Congressional hearings this week, proposing industry-wide licenses for Internet media similar to those in place for radio broadcasts, will be disdained as well.

"The availability of an industry-wide license has ensured that necessary rights can be obtained, when needed, at a known price, and pursuant to established procedures," Barry said in testimony before the Senate Judiciary Committee on Tuesday, quoting the RIAA's own PR screed.

The idea here is to end the need for on-line distributors to negotiate myriad individual licenses with a labyrinthine network of interconnected providers, all of whom depend on the complexity of the status quo to keep exogenous mutants like Napster and MP3.com from taking root on their own.

Congress catches on

We're seeing signs that Congress is finally connecting the dots. Committee Chairman Orrin Hatch (Republican, Utah) noted in his introductory remarks that "MP3.com has settled its litigation with the large record labels and publishers, and yet, having paid damages and been granted licenses to go forward, still cannot bring its service to the public."

He also noted that "Napster as we have known it cannot continue. Even Napster acknowledges that this is so. And in its alliance with the forward-thinking Bertelsmann, Napster has pledged to reinvent itself so that the technology and music fan community it has unleashed can work together in a way that respects copyright law and the rights of creators."

He added that "this new Napster can be on line in June," specifying a date and so implying that if it should take a great deal longer for the company to sort out its business, Congress might just want to have a look at what's obstructing it.

"Pro-competitive marketplace solutions that provide for a significant on-line offering of popular music delivered to consumers through an entity not controlled by the labels is the type of positive synergy I have long hoped to see," Hatch said. (emphasis added)

The Register is willing to bet that no such 'synergy' will emerge, that the entertainment industry will stonewall for all it's worth against the un-assimilated Napster, and that come the Fall, we'll be attending hearings on why the company can't satisfy the Collective with any act short of its own destruction.

Henley knows the score

Musician Don Henley testified as well, and exhibited a remarkably solid grasp of what the Collective is planning. He knew enough, for example, to attribute much of Napster's difficulty to its status as "an independent distribution system," and to the industry's refusal to play fair with licensing arrangements.

"Napster has changed everything," Henley said. "Napster and other 'locker' type systems have flourished because the record industry....has made it extremely difficult for legitimate companies to license rights on an arm's-length basis."

The reason, of course, is broad-based stonewalling. "The record industry fiddled on the sidelines while the digital revolution went on without them," he added, and said further that the major labels "should have spent their time negotiating and implementing a comprehensive licensing system -- one that addresses the interests of all parties."

"While we support the copyright infringement lawsuits filed by the record industry, the lawsuits should not be used to destroy a viable and useful independent Internet distribution system," Henley said.

But of course, that's precisely what the Collective intends. Shaming them before Congress may be a step in the right direction, but it's hardly enough in itself. The major corporate players have already shown an almost mythic imperviousness to shame.

The digital-rights swindle

The Collective is abusing copyright laws to invade every conceivable corner of the business, from production, to distribution, to retail marketing, and even to private sales of purchased recorded media, Tower Records Senior VP Mike Farrace explained in his testimony.

"If intellectual property owners had the right to control copyrights years ago the way they propose to do now, there would be no used books, no lending your records to a friend, no video rentals, and no donations of recorded products, software or even books to libraries or schools," he declared.

But his chief concern as an Internet retailer is the way the multinational media giants are using digital rights agreements as a Trojan horse with which to insert themselves into retail transactions conducted on line.

"Particularly worrisome is that some companies require individual personal data from the consumer to access the content," he said.

"Virtually all the companies interrupt the transaction in some way to gather customer information. Only one company does not, and none of the others will promise not to use this information to solicit our customers directly in the future."

"So naturally, we think requiring customers to submit their individual personal data to access a recording they're paying for, or enticing them while we're trying to conduct business with them, is unfair."

He noted also that the Collective is in a position to dictate consumer use policy and rights through the retailer.

"We have the same concerns about the rules our customers are being asked to agree to. These end-user license agreements which aren't even seen by the customer until after they've paid for the music, can be downright oppressive. Some have outrageous restrictions written by lawyers who see people as thieves instead of customers."

He said it felt as if "someone else is standing behind our cash register, free to create customer-service policy on our behalf."

And of course the combination of copy protection, technical access controls and end-user license agreements add up to one thing: "all this talk and activity about 'protecting the music' is really about controlling lawful use and cutting retailers out of the marketplace," Farrace suggested.

If a large, straightforward Internet retailer like Tower can be bullied by an industry which insists on owning everything, what chance has a comparatively 'exotic' service like P2P file sharing got?

Assimilation, or extermination, appear to be Napster's two chief alternatives here. Either one would likely suit the industry -- which, when you get to thinking about it, is all that really matters to a lot of folks. ®

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