-Caveat Lector-

CEA's Gary Shapiro: P2P file swapping is both legal and moral

Some background:
http://www.ce.org/press_room/press_release_detail.asp?id=10027
http://www.ce.org/press_room/speech.doc
http://news.com.com/2100-1023-958324.html?tag=cd_mh

http://www.mccullagh.org/image/d30-25/gary-shapiro.html


Speech by Gary Shapiro, President and CEO of the Consumer Electronics
Association.

The Campaign to Have Copyright Interests Trump Technology and Consumer Rights

We are at a critical juncture in history when the inevitable growth of
technology is conflicting with the rising power and strength of copyright
owners.  How we resolve this tension between copyright and technology will
define our future ability to communicate, create and share information,
education and entertainment.

Today I would like to share with you my views on this situation and the
questions we must confront as we wind through this confusing, but historic
maze.

There is no doubt that this era’s rapid shift to digital and other
technology is changing the rules of the game. Reproduction, transmission
and storage technology all are progressing exponentially, resulting in an
unprecedented power to copy, send and save all forms of media. Reproduction
technology has become incredibly cheap and reliable. Transmission
technology, including satellite, cable, broadcast, wired or wireless, and
often connecting through the Internet, has linked everyone at ever
increasing speeds and competitive pricing. Storage technologies also
quickly have expanded in capacity as total storage media costs have plummeted.

With each new technology, the fears of the music and motion picture
industries have grown. With television and the VCR, it was going to be the
end of movies. With CDs and cassettes, it was the supposed harm from
real-time transfers and one-at-a-time copies. Today’s technologies make
these perceived threats seem naïve and harmless. With high-speed
connectivity and the Internet, it’s not buying a CD and making a copy for a
friend; it’s downloading from a stranger or making available thousands of
copies with the touch of a keystroke.

The growth of reproduction, storage and transmission technology has
terrified copyright owners. The RIAA claims that 3.6 billion songs are
downloaded each month. The RIAA also estimates that $4.5 billion has been
lost by the music industry due to pirating. And the motion picture industry
also sees the writing on the wall. Fox Group CEO and News Corp. President
Peter Chernin in an August 21 keynote speech at an Aspen conference claimed
that Spiderman and the latest Star Wars movie were downloaded four million
times following the weekend after their release.

Based on these and similar threats the content community has gone on a
scorched earth campaign ­ attacking and burning several new recording and
peer-to-peer technologies. They have used the Congress, media and courts to
challenge the legality of technology and morality and legality of
recording. In the same Aspen speech, Chernin attacked computers as
untrustworthy and the Internet as primarily used for pornography and
downloading.

I believe that hardware and software companies have a mutual interest in
working together, so that they can sell more products. For years, consumer
electronics companies have been working with both the recording and motion
picture industries on developing technological measures that meet the needs
of both industries. For instance, the DVD standard includes anti-copying
protection. It also includes an anti-fast forward technology designed to
ensure copyright warnings are shown, but instead is being used to require
consumers to sit through movie previews. CE companies also have provided
digital interfaces that allow consumers to share content among their own
devices while restricting unauthorized redistribution to the Internet. By
protecting content at the source, content providers can be assured their
intellectual property rights are respected, while consumers can enjoy
unimpeded personal use. However, source protection should not be used to
mislead consumers to purchase CDs that can only be played on certain CD
players.

Indeed, despite the cooperative efforts, the copyright community has
declared war on technology and is using lawsuits, legislatures and clever
public relations to restrict the ability to sell and use new technologies.
Lawsuits have shut down file-sharing services like Napster and Aimster, and
threaten peer-to-peer networks like KaZaa and Morpheus. They unsuccessfully
challenged the legality of MPs recorders in the Diamond Multimedia case.
They have challenged as illegal ReplayTV, a TIVO-like device, which allows
television programming to be sorted and stored on a hard disc and which
allows a consumer to skip commercials. In fact, one TV executive equated
the skipping of commercials as “stealing” free broadcast television. The
RIAA has announced that it will start suing individuals who engage in file
sharing and has subpoenaed Internet access provider Verizon to identify a
downloading subscriber.

At the urging of the content community, Congress has stepped into the act.
Legislation has been introduced which requires all technologies to be
shaped by a government-mandated copy protection system. Other legislation
allows any copyright owner to seek and destroy the posting of copyrighted
products on P2P networks via personal computers connected to the Internet.
Still other legislation would allow a content owner to insert an embedded
watermark into the work to determine if there was infringement and, at the
content owner’s discretion, disable the device, even if, upon subsequent
determination, the use was lawful.

The most recent and scary development is that the United States Department
of Justice is threatening to jail millions of Americans who use file-
sharing services. In a presentation at the Progress and Freedom
Foundation’s Aspen Summit on August 21, Deputy Assistant Attorney General
John Malcolm said that peer-to-peer sharing is piracy and a criminal offense.

With this pronouncement, along with similar euphemisms by the media, it is
clear that the copyright community has reshaped the debate. All of a
sudden, the downloading of a song to sample an artist’s wares, behavior
most Americans between 13 and 25 engage in regularly, has been likened to a
criminal act.

Consider the clever public relations campaign of the content community.
They’ve changed the simple language that describes the acts at issue. It
used to be called “taping”, “reproducing” or “downloading”, and advocates
on both sides would call it “unauthorized reproduction” or “unauthorized
taping”. Then somehow this use of technology shifted to the more pejorative
and sinister “copying”. The word “copying” sounds bad. It got you in big
trouble in high school on a test. “Copying” is a sister to “plagiarism”
which is especially bad.

But in the past few months, Hollywood and the music industry have shifted
to different words. They now only talk about downloading as “piracy”. They
call it “stealing” and always use analogies to shoplifting products out of
a store. The Justice Department has adopted this approach. “Stealing is
stealing is stealing,” said Malcolm in Aspen.

At the same conference, Chernin echoed these themes and used the words
“piracy”, “shoplifting” and “stealing” repeatedly to describe downloading.
He even declared that those who disagree with his views on copyright are
either “amoral or self-interested”.

Another way copyright owners have distorted the debate is to tie in
downloading with our national goal of broadband deployment. They argue that
broadband demand will not grow until this issue is resolved. Indeed,
Senators Holling’s legislation is called “The Consumer Broadband and
Digital Television and Promotion Act”. Yet broadband deployment has little
to do with songs and movies, and more to do with fast Internet speed,
always- on convenience, exchanging home videos, interactivity on the web
and a range of potential uses for education, medicine, business, shopping
and gaming. Yet, some legislators have become confused and convinced by
Hollywood that there is a connection between broadband and copyright.

A third way that the copyright community has reshaped and redefined the
debate is almost biblical in its reach. The entire theme of the copyright
community is that downloading off the Web is both illegal and immoral.

But is it either? I submit it is neither.

Despite the assertions of the Justice Department, downloading is not illegal.

First, fair use rights are guaranteed to consumers by statute, and applied
judicially on a case-by-case basis. This means that, while some consumer
practices ultimately could be adjudicated as either fair use or
infringement, there is scant basis for challenging them as criminal.

The music and film industries claim that there is no such thing as fair use
"rights" in an attempt to disparage the term. They say that fair use is
only an affirmative defense to copyright infringement and therefore not a
right. But various recognized "rights" only may be asserted as affirmative
defenses in a lawsuit. For example, in a slander suit, one may assert the
First Amendment right but only as an affirmative defense; this does not
diminish the fact that the right exists.

Second, time after time, practices of individuals that were initially
equated with "piracy" or "theft" have been shown to be neutral or
beneficial to copyright owners, and have either been tolerated or accepted
as fair use. Think of the VCR and the Supreme Court decision holding that
its use to tape full movies is fully legal.

Third, the 1997 NET Act's requirement of a total retail value of $1,000 per
infringement should be taken seriously as a barrier to bringing cases
against ordinary consumers. This law should not be re-interpreted, after
the fact, as a criminal enforcement vehicle against consumer-to-consumer
recording and "swapping" practices.

Downloading is not immoral either. To make downloading immoral, you have to
accept that copyrighted products are governed by the same moral and legal
principles as real property, thus the recent and continuous reference by
the copyright community to label downloading as stealing. But the fact is
that real and intellectual property are different and are governed by
different principles. Downloading a copyrighted product does not diminish
the product, as would be the case of taking and using tangible property
such as a dress. At worst, it is depriving the copyright owner of a
potential sale. Indeed, it may be causing a sale (through familiarity) or
even more likely, have no impact on the sale. My son often will become
familiar with artists through downloading their music on the Internet and
then go out and buy the CD.

The comparison to real property fails for several other reasons. Real
property is subject to ownership taxes. Real property lasts forever and can
be owned forever. A copyright can be owned only for a limited period of
time. Indeed, the United States Constitution declares this. More, copyright
law must bow to the First Amendment that expressly allows people to use a
copyrighted product without the permission of the copyright owner. This
concern contributes to the statutory and judicial concept of “fair use”.
The First Amendment includes, not only the right to send, but also the
right to receive. Indeed, in 1984, the U.S. Supreme Court in declaring the
VCR a legal product, said that it could be okay to copy an entire
copyrighted product. So if the Supreme Court expressly held that VCR
copying in the home for non-commercial purposes is a legal activity, how is
it suddenly labeled as “piracy” because the device is a computer?

The major record labels concede that they totally have failed to transform
their business models in response to the Internet. But then they whine that
they “cannot compete with free”, referring to the free downloading the
Internet allows. While I am sympathetic to the radical shift of selling a
CD with a one good song for $20 to a marketplace where consumers pick and
choose which songs they want, I am not sure this is the correct approach.
For one thing, you can compete with free. Purveyors of bottled water do it.
America Online does it. Book retailers do it with libraries. Independent
online music services say they can do it, if they can clear the rights.

The Beatles 1 album, which contained 30-year-old songs that could have been
downloaded for free from Napster-like services from day one, but
nevertheless sold some 26 million copies. Why? Because people were willing
to pay for the quality of a CD over the often barely acceptable sound
quality of a download using P2P services.

Of course, recording artists must make a living and should be paid. Most
consumers likely would pay a reasonable amount for quality downloads,
access to full catalogs and maybe some promotional items such as concert
tickets or hidden tracks on a CD. Artists even can get new revenue from the
Internet by identifying their fans and promoting their concerts, new
releases and other products. But the music industry has made little effort
to look at new business models or provide a viable and attractive
alternative to the downloading services.

The recording industry and motion picture industry should stop complaining
so much and look for technological solutions to its own problems.  Doesn’t
it make more sense to protect content at the source, using technologies
that maintain consumer expectations for personal use? Content providers
would be served better by working with technology companies to deploy these
solutions rather than suing everyone and lobbying Congress to legislate
unreasonable and consumer-unfriendly mandates.

Despite a lack of hits and a recession, music and movie sales are holding
their own. Compare this to real downfalls in other sectors from
telecommunications to IT to broadcasting, and you must ask yourself if the
Internet is actually a good thing for the copyright community.

So where does this lead us? I submit that policymakers should follow some
basic principles:

First, do no harm. If we had previously heeded the concerns of the creative
community, we would have no radio, no TV, no VCR, no computer, no e-mail
and no Internet. Yet each of these technologies has enhanced the revenue
stream for copyright owners.

Second, advances in technology should not be restricted. We cannot even
imagine today what future advances we will choke off if we artificially
restrict technology. If we can envision technology connecting the poorest
in the world to medical information, to education and to a better quality
of life, we should be careful about stifling its growth. Advances in
technology also can supply tools to content providers to help them manage
digital rights in a manner that takes into account consumers’ expectations.

Third, claims of harm should be greeted with great skepticism. Not every
recording is a lost sale. It actually may represent a stream of future
sales. Artists from Chuck D to Janis Ian to Courtney Love support home
recording rights for practical business reasons.

Fourth, copyright owners have a high burden of proof before any technology
should be restricted. Broadcasters and the motion picture industry have
come close to making the case that redistribution of free, over-the-air
broadcast television over the Internet is harmful to the concept of free
over- the-air broadcasting. This is an area where careful legislation or
regular legal review, respectful of consumer rights and expectations, may
be appropriate.

Fifth, copyright owners should continue developing ways to protect their
content at the source, rather than insisting that the burden should be on
the device that plays it. Perhaps they should consider a more flexible
business model that focuses on keeping honest people honest. But, the
corollary here is don’t sell CDs that don’t work on many CD players.

Finally, any restrictions on technology should be narrowly crafted, define
limitations on abuse by copyright owners and define legitimate consumer
recording rights and expectations. For example, CEA supports the distance
education bill presented by Congressman Darrell Issa of California and Rick
Boucher of Virginia that addresses a specific IP concern rather than
attempting to legislate through a one-size-fits-all approach. The Boucher-
Issa bill reaffirms fair use rights and would amend the Copyright Act to
ensure educators can use PCs and new technology to foster distance learning.

The collision course between copyright owners’ desire to preserve existing
business models and the inevitable development of newer, better, faster and
cheaper technologies need not be fatal. Our future is bright if we resist
the temptation to restrict technology. Digital technology will foster a
Renaissance of creativity. It will connect our world and soon allow
everyone to have low-cost access to information, entertainment and
education. If the play button becomes the pay button, our very ability to
raise the world’s standard of living and education will be jeopardized.

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