4.1. Music Industry
4.2. Motion Picture Industry
126.96.36.199. What is MP3?
MP3 stands for MPEG-1 Audio Layer 3 and was adopted by the Motion Picture Experts Group (MPEG) as the open standards for digital audio file compression in 1987 and was approved as an ISO/IEC standard in 1991. Before MP3s was adopted, digital audio files took a very long time to download. Nowadays, MP3s can be downloaded in just a few minutes while maintaining the original sound quality. Despite the ease of downloading, at that time, they are very rare and difficult to locate online. It was not until Napster that anyone could access whatever songs they wanted, whenever they wanted, online.
188.8.131.52. What is Napster?
Napster is a music file-sharing system created by Shawn Fanning in January 1999, while studying in Northeastern University. He dubbed it as Napster, as it originated from a high school nickname that later became his internet handle. During May 1999, Shawn Fanning and Sean Parker, both 20 years old then, launched Napster and by June, the program was being downloaded by an exponentially-increasing user base. Napster allowed users to share their MP3s freely over the internet as it is based on peer-to-peer technology (P2P), which essentially enables users to link their computers directly to each other via the internet to share whichever files they choose.
184.108.40.206. How does Napster work?
In order to get MP3s through Napster, the user must first register with Napster to download and install the Napster software. Then, the registered user can list every MP3s stored in his/ her computer's hard disk onto Napster for others to access. Once connected to Napster online, the software will upload all the names of the user's MP3s to Napster's server. The server will act as a holder that temporarily store the names of the MP3s under the user's name, forming a directory of MP3s on the hard drives of the user, available for downloading by other users.
Napster users can locate MP3s by running a search based on the name of the song or artist. Once the requested MP3 is located, the software then connects the inquiring hard drive to the central user directory, which sends the inquiring computer a list of active users who have the requested MP3 on their computer. Upon the direction of the user, the software opens a link between the inquiring PC and the hard drive of the user with the requested MP3 selected. A copy of the MP3 is then transferred back to the inquiring PC. So although the music travels over the Internet, Napster never possesses any of the MP3 files. The downloaded MP3 can be played directly from the hard disk using the software as well.
Napster became so popular that even without any marketing it grew at a rate of 200% per month. Users downloaded 2.8 billion songs in February 2001, according to US-based Webnoize.
220.127.116.11. Napster Lawsuit
The recording Industry Association of America (RIAA) promptly filed a federal lawsuit against Napster in December 1999. RIAA represents numerous recording companies, and was responding to the fact that the recording industry realised that Napster was promoting the free and unlimited trading of files. This fact was swiftly noticed due to the sheer popularity of Napster as a file sharing domain. However, RIAA did not directly sue Napster for copyright infringement, rather it alleged that the software used and services rendered allowed users to obtain copyrighted material free of charge. This made it responsible for contributory and vicarious copyright infringement, and in July 2000, was found liable by Judge Marilyn Hall Patel of the Federal District Court and was issued a preliminary injunction to withdraw its music file sharing platform.
Napster successfully appealed to the US Court of Appeals for the Ninth Circuit to stay Judge Patel's preliminary injunction on July 28, 2000. Come February 12, 2001, the Court confirmed again that Napster was liable to the record companies for secondary liability, due to the contributory and vicarious nature of its service. This was based on the evidence that Napster users were guilty of direct copyright infringement. However, the Court maintained that Judge Patel's original injunction was too broad, as it prevented users from exchanging MP3s which are non-infringing. Hence it ordered Judge Patel to reconsider the injunction. However, the Court ordered Napster to keep track of its network activities and block access to infringing material when the material's location is detected. Napster was incapable of doing this and had to shut down its services in July 2001.
There were some factors which the Court considered in its assessment:
Direct Infringement by Napster users
The Court agreed with the findings of the District Court that there was evidence that an overwhelming majority of Napster users had indeed infringed on copyright laws. These include the record labels' exclusive rights of reproduction and distribution. Users compromised these rights when they download and consequently upload the copyrighted files for others to copy.
Contributory and Vicarious Infringement
There are three essentials a copyright owner has to prove to file a claim of contributory infringement.
- There has to exist a direct infringement.
- The accused must have reasonable knowledge of the infringing activity.
- The accused must have had a hand in the underlying direct infringement.
Napster allegedly claimed that it had neither actual nor constructive knowledge of any infringing activity. However, the Court disagreed, and added that there was material contribution to the said activity via the site and facilities.
Vicarious liability, as reiterated by the Court, has three fundamentals.
- There must be a direct infringement.
- The accused must have both the right and ability to overlook the infringing activity.
- The accused must have a financial motive.
The Court maintained that Napster was indeed liable for vicarious copyright infringement as it had knowingly refused to monitor the conduct of its users, and has also gained financially from the infringing activities by enhancing the appeal of using Napster.
Napster's 'Fair Use' Defense
Napster insisted that its users were involved in fair use of the copyrighted material. To investigate this claim, the lower Court examined factors such as:
- Purpose and character of use.
- Nature of the copyrighted material.
- The amount and substantial of the portion used in relation to the overall work.
- The repercussions upon the potential market due to this use.
- Judge Patel concluded that Napster users were unfair in their usage.
Napster raised the following arguments in support of its 'Fair Use' claim:
- Mere sampling
Napster claimed that its users were downloading MP3 files to sample the music before making a decision to purchase them. Sampling here refers to the complete, free and permanent downloading of material. The idea of sampling was not commented on whether it could ever constitute fair use; the Court held that the act of sampling in the Napster case adversely affected the market for artist's works. Hence, it cannot be considered fair use.
Napster also argued that its users already had a licence to the copyrighted music they own as audio CDs and were only downloading them into a different medium. Hence, this can be considered fair use. However, the Court disagreed, and said that Napster could not rely on the space-shifting argument because it was only valid when it did not involve the distribution of the material to the public.
The Court reaffirmed Judge Patel's decision and insisted that acts by Napster users did not constitute (statutorily protected) fair use as it has negatively affected the artists' market in at least two ways, them being reducing audio CD sales and raising the barriers to entry in the market for digital and downloaded music.
The Court was unwilling to grant Napster with the protections afforded by the statute, although the latter asserted that its users were protected under section 1008 of the Audio Home Recording Act (AHRA), which states that:
"No action may be brought under this title alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device ... or based on the noncommercial use by a consumer of such a device or medium for making digital musical recordings ..."
The Court held that computers and their associated hard drives are not included in the statutory definition of 'digital audio recording devices' protected under the AHRA. Also, the storage of songs fixed on a computer hard drive is not considered as the making of 'digital musical recordings' under the statute. One of Napster's primary defences was based on the Digital Millennium Copyright Act (DMCA), enacted in 1998 in response to the boom of the Internet and also to the worries of online service providers (OSPs) regarding their potential liability for copyrighted works passing through their servers. Section 512 of the DMCA provides limitations on liability of 'online service providers' only to the extent that the infringement involves the following four elements:
- Transitory network transmission
- Storage of materials on behalf of users (for example, web hosting and remote file storage)
- The provision of information location tools (for example, providing links and search engines)
Napster alleges that section 512 of the DMCA could be applied to their situation. Unfortunately, the Court's handling of the DMCA in Napster's case was not entirely clear, and this could be due to the fact that the functions set out in this section is narrowly defined, and it was clear that legislators had not anticipated P2P file sharing when enacting those provisions. However, there were indications that the US Congress had intentions of providing some relief to the direct, contributory and vicarious infringer in certain, limited circumstances. Consequently, the Court was reluctant to form an observation and decided to adjourn any ruling or decisions at this point until a full trial.
18.104.22.168. Napster's Impact on Music Industry
Undoubtedly, the free distribution of MP3s over the Internet will continue to be a focus for legal action. However, this has not decreased the esteem with which other P2P service providers are met with. There were serious legal issues experienced by Napster, but this served to also, increase other, similar, file sharing providers. Examples include Gnutella and Bit-torrent. These two do not rely on a centralised server system to keep track of what is currently online and store pointers to the music files. This removal of the centralised system removes the service provider from playing a middleman role. Truly, a P2P network should not have anyone at the centre regulating the flow of traffic. in this lies a more alarming challenge to any claims of copyright infringement.
Despite the legal win of the major recording companies over Napster, the former still took the initiative to address this issue by means of a fresh commercial endeavour. EMI, Bertlesmann and Warner Music have signed a deal with Real Networks and AOL to form Musicnet, an online clearinghouse for any website that wants to license recordings for downloading. Likewise, Sony and Vivendi Universal have announced a licensing service called Duet. Vivendi Universal has recently announced that it will acquire former rival MP3.com for US$372 million. Essentially, any music portal will be considerably weakened without getting material from the top five recording studios.
Though the Court in the Napster case played a protective role in supporting the recording industry against P2P service providers, there will nevertheless be another legal battle between them, what with technology advances on both sides. These new technological threats will prove to be a challenge for any legal claims. However, the Court did hint at the possibility of a different outcome in the future by abstaining from ruling on how the DMCA would have been functional in this case. Something which P2P service providers can look forward to may be the outcome of the Court's interpretation of this Act since it conceded that Congress intended to provide some relief to direct, contributory and vicarious infringers in this digital era.
However, no matter what the verdict, the public is unlikely to be swayed from their intrinsic view that reflects a sense of privilege to free or cheaper access to music. This feeling towards the copyright law and the music industry can be finely summarised by Lord Templeman, in the 1988 House of Lords decision in CBS Songs Ltd v Amstrad Consumer Electronics Plc case:
"From the point of view of society the present position is lamentable. Millions of breaches of the law must be committed by home copiers every year. Some home copiers may break the law in ignorance, despite extensive publicity and warning notices on records, tapes and films. Some home copiers may break the law because they estimate that the chances of detection are non-existent. Some home copiers may consider that the entertainment and recording industry already exhibit all the characteristics of undesirable monopoly — lavish expenses, extravagant earnings and exorbitant profits — and that the blank tape is the only restraint on further increases in the prices of records. Whatever the reason for home copying the beat of Sergeant Pepper and the soaring sounds of the Miserere from unlawful copies are more powerful than law-abiding instincts or twinges of conscience. A law which is treated with such contempt should be amended or repealed."
- Sean McManus. (August, 2003). A short history of file sharing. In UK writer, author and freelance journalist Sean McManus. Retrieved November 13, 2008, from
- Francis Au-Yeung. (n.d.). Napster v The Music Industry. In Cover Story: Napster v The Music Industry. Retrieved November 13, 2008, from
- The Library of Congress. (n.d.). H.R.2281 Digtal Millennium Copyright Act (Enrolled as Agreed to or Passed by Both House and Senate). In The Library of Congress THOMAS. Retrieved November 13, 2008, from
- Electronic Frontiers Australia, Publications. (July 1, 2005). Fair Use and Other Copyright Exceptions:An examination of fair use, fair dealing and other exceptions in the Digital Age. In Electronic Frontiers Australia, Submission. Retrieved November 13, 2008, from
- Stanford University Libraries. (n.d.). CHAPTER 9. Fair Use. In COPYRIGHT & FAIR USE Stanford University Libraries. Retrieved November 13, 2008, from
- Sumrall, T. (November 12, 2003). The History of Napster. In napster history. Retrieved November 13, 2008, from
- "History of Napster- Facts about Napster." MP3. Alken M.R.S MP3 Guides.