SPEAKERS CONTENTS INSERTS
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81–896 PDF
2002
PIRACY OF INTELLECTUAL PROPERTY
ON PEER-TO-PEER NETWORKS
HEARING
BEFORE THE
SUBCOMMITTEE ON COURTS, THE INTERNET,
AND INTELLECTUAL PROPERTY
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
SEPTEMBER 26, 2002
Serial No. 103
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Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://www.house.gov/judiciary
COMMITTEE ON THE JUDICIARY
F. JAMES SENSENBRENNER, JR., WISCONSIN, Chairman
HENRY J. HYDE, Illinois
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR SMITH, Texas
ELTON GALLEGLY, California
BOB GOODLATTE, Virginia
STEVE CHABOT, Ohio
BOB BARR, Georgia
WILLIAM L. JENKINS, Tennessee
CHRIS CANNON, Utah
LINDSEY O. GRAHAM, South Carolina
SPENCER BACHUS, Alabama
JOHN N. HOSTETTLER, Indiana
MARK GREEN, Wisconsin
RIC KELLER, Florida
DARRELL E. ISSA, California
MELISSA A. HART, Pennsylvania
JEFF FLAKE, Arizona
MIKE PENCE, Indiana
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J. RANDY FORBES, Virginia
JOHN CONYERS, Jr., Michigan
BARNEY FRANK, Massachusetts
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
TAMMY BALDWIN, Wisconsin
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
PHILIP G. KIKO, Chief of Staff-General Counsel
PERRY H. APELBAUM, Minority Chief Counsel
Subcommittee on Courts, the Internet, and Intellectual Property
HOWARD COBLE, North Carolina, Chairman
HENRY J. HYDE, Illinois
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ELTON GALLEGLY, California
BOB GOODLATTE, Virginia, Vice Chair
WILLIAM L. JENKINS, Tennessee
CHRIS CANNON, Utah
LINDSEY O. GRAHAM, South Carolina
SPENCER BACHUS, Alabama
JOHN N. HOSTETTLER, Indiana
RIC KELLER, Florida
DARRELL E. ISSA, California
MELISSA A. HART, Pennsylvania
HOWARD L. BERMAN, California
JOHN CONYERS, Jr., Michigan
RICK BOUCHER, Virginia
ZOE LOFGREN, California
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
TAMMY BALDWIN, Wisconsin
ANTHONY D. WEINER, New York
BLAINE MERRITT, Chief Counsel
DEBRA ROSE, Counsel
MELISSA L. MCDONALD, Full Committee Counsel
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ALEC FRENCH, Minority Counsel
C O N T E N T S
SEPTEMBER 26, 2002
OPENING STATEMENT
The Honorable Howard Coble, a Representative in Congress From the State of North Carolina, and Chairman, Subcommittee on Courts, the Internet, and Intellectual Property
The Honorable Howard L. Berman, a Representative in Congress From the State of California, and Ranking Member, Subcommittee on Courts, the Internet, and Intellectual Property
The Honorable Rick Boucher, a Representative in Congress From the State of Virginia
The Honorable Bob Goodlatte, a Representative in Congress From the State of Virginia
The Honorable Zoe Lofgren, a Representative in Congress From the State of California
The Honorable Darrell E. Issa, a Representative in Congress From the State of California
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The Honorable William D. Delahunt, a Representative in Congress From the State of Massachusetts
The Honorable Ric Keller, a Representative in Congress From the State of Florida
The Honorable Robert Wexler, a Representative in Congress From the State of Florida
The Honorable Martin T. Meehan, a Representative in Congress From the State of Massachusetts
The Honorable Tammy Baldwin, a Representative in Congress From the State of Wisconsin
The Honorable Anthony D. Weiner, a Representative in Congress From the State of New York
WITNESSES
Ms. Hilary Rosen, Chairman and Chief Executive Officer, Recording Industry Association of America
Oral Testimony
Prepared Statement
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Ms. Gigi Sohn, President, Public Knowledge
Oral Testimony
Prepared Statement
Mr. Phil Galdston, Songwriter-Producer
Oral Testimony
Prepared Statement
Mr. Randy Saaf, Chief Executive Officer, MediaDefender
Oral Testimony
Prepared Statement
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Prepared Statement of the Honorable Darrell E. Issa, a Representative in Congress From the State of California
Prepared Statement of Chris Gorog, CEO, Roxio, Inc. Santa Clara, CA (Remarks for the Aspen Summit/Symposium on Digital Rights—August 20, 2002)
Prepared Statement of the Honorable John Conyers, Jr., a Representative in Congress From the State of Michigan
Prepared Statement of the Honorable Henry Hyde, a Representative in Congress From the State of Illinois
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The Washington Post Article of September 24, 2002
APPENDIX
Prepared Statement of the Honorable Lamar Smith, a Representative in Congress From the State of Texas
Prepared Statement of the Honorable Howard L. Berman, a Representative in Congress From the State of California, and Ranking Member, Subcommittee on Courts, the Internet, and Intellectual Property
Prepared Statement of the Honorable Rick Boucher, a Representative in Congress From the State of Virginia
Prepared Statement of David P. McClure, President, US Internet Industry Association
Prepared Statement of the National Music Publishers' Association
Letter from Donald M. Whiteside, Vice President Legal & Goverment Affairs, Intel Corporation
Prepared Statement of Steve Griffin, Chairman and CEO, StreamCast Networks, Inc.
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News Release from the American Legislative Exchange Council (ALEC)
Letter from Barbara Simons, Ph.D., and Eugene H. Spafford, Ph.D., Co-Chairs, U.S. ACM Public Policy Committee (USACM), Association for Computing Machinery
Letter from Marybeth Peters, Register of Copyrights of the United States of America, United States Copyright Office
Letter from Tom Turner, General Manager, Sound Choice
Letter from Michael Wood
Letter from Linn R. Skinner, Skinner Sisters
Executive Memorandum from The Heritage Foundation
Letter from Barton Herbison, Executive Director, Nashville Songwriters Association International
Letter from Lewis M. Bachman, Executive Director, The Songwriters Guild of America
Prepared Statement of John Hale, Nicholas Davis, James Arrowood and Gavin Manes, Center for Information Security, University of Tulsa
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Prepared Statement of Stephen Hinkle
Memorandum from Philip S. Corwin, Butera & Andrews, Attorneys at Law
Letter from Raymond E. Ozzie, Chairman and CEO, Groove Networks
Prepared Statement of Panos Anastassiadis, President Chief Executive Officer, Cyveillance, Inc.
Letter from Johnathan Zuck, President, Association for Competitive Technology
Prepared Statement of Edward W. Felten, Associate Professor of Computer Science at Princeton University
PIRACY OF INTELLECTUAL PROPERTY
ON PEER-TO-PEER NETWORKS
THURSDAY, SEPTEMBER 26, 2002
House of Representatives,
Subcommittee on Courts, the Internet,
and Intellectual Property,
Committee on the Judiciary,
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Washington, DC.
The Subcommittee met, pursuant to call, at 9 a.m., in Room 2141, Rayburn House Office Building, Hon. Howard Coble [Chairman of the Subcommittee] presiding.
Mr. COBLE. Good morning, ladies and gentlemen. The Subcommittee will come to order.
With the Subcommittee's permission, and the audience's indulgence, I'm going to deliver a longer than usual opening statement.
Prior to addressing the subject matter of today's hearing, I feel obliged to acknowledge that this is very likely the final time that I will preside over a hearing or markup as Chairman of the Subcommittee on Courts, the Internet, and Intellectual Property. While I won't close the door on examining other issues during the much-rumored lame-duck session, I can't say with certainty that we will meet again formally as a Subcommittee to conduct business in the 107th Congress. We will play that by ear.
If this is in fact my swansong, I want to say thank you.
I've been a willing participant in politics for a long time, but I confess that during my service as an elected official through these many years, I have never enjoyed policymaking more than I have with our Subcommittee. I was fortunate to have been surrounded by many decent, creative, and industrious people, Republican and Democratic Members, staffers, and those from other public and private quarters, who wanted to participate in the policy debates of the past 6 years. I'm reluctant to begin reciting names, because once you start on that course, you inevitably omit people who ought to be recognized.
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But what has impressed me about everyone connected to our Subcommittee during my tenure as Chairman has been a collective willingness, for the most part, to work together, whatever our differences. I'm old enough to understand the rough and tumble nature of the legislative process, and to a very real extent, that feature is a healthy component of policymaking, reflecting as it does our constitutional right as Americans to express ourselves freely.
I believe, in this room, pardon my immodesty, but in this room, on this podium, and with many of you in the audience, I think we've done a better than average job for the past 6 years at expressing ourselves civilly, not just freely. And I think we may attribute that tone to the decency of those assembled herein.
Again, I thank you all very much for the generosity you've extended to me. I consider our accomplishments of the past 6 years to be better than average work. And I think during that time, folks, I think we have supported owners of copyrights, patents, and trademarks, both those who are financially struggling and those who are financially solvent, and the people who represent them.
Now, I am going to mention a couple names now. Howard Berman, who sits to my left—in fact, he is to my left generally, but now literally to my left. [Laughter.]
Howard has been a tremendous Ranking Member for the past 4 years. Barney Frank, the Ranking Member the first 2 years I served as Chairman. Alec French and his able Democrat staffers. Blaine Merritt and his able Republican staffers. Mitch Glazier, who preceded Blaine in that role. Eunice Goldring, who does the administrative work and keeps things away from the reefs and the rocks and the shoals on a day-to-day basis. And of course, Chairman Hyde, Chairman Sensenbrenner, and Ranking Member Conyers. And all Members of the Subcommittee.
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In the event that we do have another hearing, Howard, I promise you won't have to hear this speech again. This will be the final speech.
Normally, as you all know, I deliver my opening statement, and then I recognize the distinguished gentleman from California. Today I'm going to reverse that procedure because the bill before us is Howard's bill. So I am going to now recognize the distinguished gentleman from California, the Ranking Member, for his opening statement. I will then give my opening statement. And then we'll recognize others who want to give opening statements.
Mr. Berman?
Mr. BERMAN. Well, thank you very much, Mr. Chairman. And I also may take a little more time than is generally allotted for my opening statement. The only thing I can assure you is that if I said everything I wanted to say, it would be a lot longer.
But I think, first of all, before getting to the legislation before us, I just wanted to take a moment to reflect on your tenure as Chairman. As you mentioned, it is very possible that your chairmanship of this Subcommittee ends—well, as Republican rules now stand, your tenure as Chairman ends with the end of the 107th Congress. And I really want you to know that I have deeply enjoyed and deeply value our relationship as Chairman and Ranking Member these past 4 years. I say this not in any pro forma way but sincerely, that you have led this Subcommittee through innumerable legislative and political challenges, and you have done so with characteristic charm, will power, and an always easygoing demeanor.
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And your record I think is worth talking about for a moment because the accomplishments of this Subcommittee under your tenure have been really enormous. Think about it for a second. The Digital Millennium Copyright Act. The American Inventors Protection Act. We tried a long time with that legislation before you put it through this Committee, this House, and this Congress. The Sonny Bono Copyright Term Extension Act. The No Electronic Theft Act. The Satellite Home Viewer Improvement Act. The Anti-Cybersquatting Consumer Protection Act. I even remember the Work Made for Hire and Copyright Correction Act. [Laughter.]
Mr. COBLE. If the gentleman will suspend, so do I. [Laughter.]
Mr. BERMAN. And the Madrid Protocol Implementation Act. And that we did a number of times, if I remember. And it looks like today may be the day that we finally send that to the White House. Other innumerable but less heralded bills.
I think that the American public owes you a debt of thanks for your dedicated service in your role as Chairman of this Subcommittee the past 6 years. I owe you a personal debt of thanks for including me as a partner in the leadership of the Subcommittee. I couldn't have been blessed with a better person to work with from the oppose side of the aisle than you, and I'm very grateful for having had the opportunity to work with you and to serve with you.
Now, to turn to the oversight hearing on the P2P piracy issue and the legislation.
I think there have been some truly outrageous attacks on the P2P Piracy Prevention Act, and I want to take this opportunity to try and set the record straight. When we first introduced the P2P piracy bill, the Chairman and I, as well as Mr. Smith and Mr. Wexler, I never expected that anyone would challenge the underlying premise of the bill, namely that copyright owners should be able to use reasonable, limited, self-help measures to thwart rampant P2P piracy. But there are, it turns out, folks who actually challenge that premise.
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The head of a big trade association claims it's legal to make unauthorized distributions of copyright works to 100 million P2P users. P2P software companies claim that, even if illegal, P2P piracy causes no harm. Representatives of the computer industry say that only record companies suffer harm, and they deserve it for charging too much. Others vaguely theorize that copyright owners' self-help will threaten security or privacy. And still other piracy profiteers attempt to thwart any solution to P2P piracy and then throw their hands up and say it's an insoluble problem.
Let's start with a basic fact: Unauthorized distribution or downloading of copyrighted works on public P2P networks is illegal. To paraphrase the 9th Circuit in the Napster case, public P2P users ''who upload file names to the search index for others to copy violate a copyright holders' distribution rights. P2P users who download files containing copyrighted music violate a copyright holder's reproduction rights.'' Any attempt to say otherwise is a bald-faced attempt to rewrite very well-settled law.
Let's move to another indisputable fact: Massive theft of copyrighted works is the predominant use for public P2P networks today. There are now approximately 3 billion—3 billion—files P2P downloads a month—a month. The vast majority of these downloads contain copies of copyrighted works for which the copyright owners receive no compensation.
Now, another fact: P2P piracy doesn't just affect the bogeymen—record companies and movie studios. P2P piracy destroys the livelihood of everyday people.
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What do piracy profiteers have to say to Linn Skinner, a Los Angeles needlework designer whose livelihood has been destroyed by Internet piracy? Or about Steve Boone, a Charlotte small-business man—notice, Los Angeles, Charlotte—who has watched P2P piracy decimate his karaoke tape company? How do they respond to Mike Wood, a struggling Canadian recording artist who believes P2P piracy will derail his recording career before it gets off the ground? What do piracy profiteers say to the vast majority of songwriters who make less than $20,000 a year and have yet to make one thin dime from the massive P2P piracy of their works?
Songwriters can actually quantify their P2P piracy losses. By statute, a songwriter is both entitled and limited to collecting 8 cents for every digital phonorecord delivery of sound recordings containing her songs. Each illegal P2P download of a song robs the songwriter of that 8 cents.
Those 8 cents may not seem like much, but multiply 8 cents by the reported 3 billion monthly P2P downloads. It calculates out to $240 million a month. Even one-tenth of that amount represents real money to the 5,000 American songwriters.
Now another fact: If piracy profiteers were truly concerned about security and privacy threats to P2P users, they would address the security and privacy threats posed by the P2P networks themselves. A recent white paper by the University of Tulsa Center for Information Security details how KaZaA, Gnutella, and other popular P2P networks expose P2P users to spyware, Trojan horses, system exploits, denial of service attacks, worms, and viruses. A joint paper by Hewlett-Packard labs and the University of Minnesota details how the vast majority of P2P users are exposing personal information, such as credit card numbers, to every other P2P user. In fact, the United States courts, the House, and the Senate all block the use of public P2P networks because of the security concerns they pose.
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Do the piracy profiteers talk about these real security and privacy concerns? No. And you know why—because it is the piracy profiteers who point the spyware on the computers of P2P users so they can surreptitiously collect their personal information and sell it to third parties.
Another fact: P2P companies could design their software to stop piracy, but they don't. Grokster has designed its P2P software to filter out pornography, but has it ever tried to filter out copyright infringements? Napster claimed it couldn't stop piracy, but after the court ordered it to do so, it suddenly found a way to stop most if not all piracy on its networks.
Rather than looking for solutions to piracy, P2P companies are designing their systems to be better piracy tools. Both Morpheus and KaZaA have upgraded their software specifically to impair the ability of copyright owners to proliferate decoy files through the networks.
Based on all these facts, what can an objective person conclude other than many companies plan to profit from piracy and have no intent or desire to stop it?
I look at these facts and figures, at the faces of copyright owners, and I see a problem in desperate need of a solution. P2P piracy must be cleaned up and cleaned up now. The question is, how?
I think my P2P piracy bill is an important part of the solution. The Peer-to-Peer Piracy Prevention Act is quite simple in concept. It says that copyright owners should not be liable for thwarting the piracy of their works on P2P networks if and only if they can do so without causing harm.
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You might reasonably wonder why we need to pass legislation giving property owners the right to protect their property against theft. After all, the U.S. Supreme Court has held that ''an owner of property who seeks to take it from one who is unlawfully in possession has long been recognized to have greater leeway than he would have but for his right to possession.'' The claim of ownership will even justify a trespass and warrant steps otherwise unlawful.
The problem is that a variety of State and Federal statutes may create liability for copyright owners engaging in otherwise justifiable self-help. That's not fair. Copyright owners should have the same right as other property owners to stop the brazen theft of their property. The P2P piracy bill simply ensures that the law will no longer discriminate against copyright owners.
Obviously, it is critical that a liability safe harbor be appropriately limited. In drafting the P2P piracy bill, I tried to ensure that only reasonable self-help technologies would be immunized and the public would be protected from harm and that overreaching or abuses by copyright owners would be severely punished.
The most important limitation in the bill is the narrow breadth of the safe harbor itself. The bill says that copyright owners get immunity from liability under any theory but only for impairing the unauthorized distribution, display, performance, or reproduction of their own works on public P2P networks.
If the copyright owner's impairing activity has some other effect, like knocking a corporate network offline, the copyright owner remains liable under whatever previous theory was available.
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Some claim that the bill is not limited that way. Their claim appears to be that the bill gives a copyright owner immunity for anything she does as long as it has the effect of stopping piracy on a P2P network. By their logic, the bill allows a copyright owner to burn down a P2P pirate's house if the arson stops the pirate's illegal file trading. Clearly, the bill says nothing of the sort, and no judge or disinterested party could read it that way.
The bill specifically states that a copyright owner cannot delete or alter any file or data on the computer of a file trader. Thus, a copyright owner can't send a virus to a P2P pirate. It can't remove any files from the pirate's computer. And it can't even remove files that include the pirated works. The safe harbor does not protect a copyright owner whose anti-piracy actions impair the availability of other files or data within the P2P network, except in certain necessary circumstances.
Some folks have raised concerns about this provision, and we're thinking about alternative language that could resolve their concerns. The bill denies protection to a copyright owner if her anti-piracy action causes any economic loss to any person other than the P2P pirate. The safe harbor is also lost if the anti-piracy action causes more than de minimis loss to the property of the P2P pirate.
Finally, the safe harbor is lost if the copyright owner fails to notify the Attorney General of the anti-piracy technologies that he or she plans to use or fails to identify herself to an inquiring file trader.
Obviously, these limitations would be meaningless if copyright owners did not have adequate incentive to obey them. The P2P piracy bill provides such incentives by subjecting transgressing copyright owners to more liability than they have under current law.
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This is a critical point. If a copyright owner falls outside the safe harbor, an aggrieved party could sue the copyright owner for any remedy available under current law and for an additional civil remedy created by the P2P piracy bill. The bill also gives the U.S. Attorney General new power to seek an injunction against transgressing copyright owners.
The potential for liability under this wide variety of remedies provides copyright owners with strong incentives to operate within the strict limits of the safe harbor.
I think the P2P piracy bill provides a strong starting point for legislation enabling copyright owners to use reasonable self-help to thwart P2P piracy. I don't claim to have drafted a perfect bill. I welcome suggestions for improvements. I know, however, that while I will listen carefully to those who wish to solve the P2P piracy problem, I'm not that interested in being solicitous of those who wish to profit from it.
Thank you very much, Mr. Chairman, for your indulgence here.
Mr. COBLE. Thank you, Mr. Berman. And I thank you as well, Howard, for your generous comments at the outset.
We normally restrict opening statements to the Ranking Member and the Chairman, but because of the widespread interest that's been focused upon this issue, I want to ask my Members, how many would like to make opening statements?
Mr. ISSA. I'll submit mine for the record, Mr. Chairman.
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Mr. COBLE. If you would.
And I think it's in order that Mr. Berman exceeded the 5 minutes, because this is his bill, and I think that was in order. But I would ask the rest of you, if you would, to confine your opening statements, if you can, to within the 5-minute framework, because we do have a busy day on the floor today.
I have been the beneficiary of complaints regarding bills that I have introduced, but I have never received such notoriety from a bill that I did not introduce. I co-sponsored this bill. And if Howard Berman asked me today to co-sponsor it, I would do so again.
As Chairman of this Subcommittee—and, for that matter, as Members of this Subcommittee—I think it is our responsibility to promote efforts to reduce infringement or piracy of intellectual property. To that end, this hearing is intended to explore the problem of piracy on P2P networks and possible remedies.
As Mr. Berman just said, if you have suggestions, come forward with them. We're seeking solutions.
Many people have inserted scare tactics into this. If you can successfully play with a scare tactic and frighten people, you have a leg up. I've read in different articles where anyone who supports this legislation is in the pocket of Hollywood, and I take umbrage with that for two reasons. A, it implies that only Hollywood benefits from anti-piracy approaches. And B, it implies that we're in somebody's pocket, and I don't think there's anyone on this Subcommittee that's in the pocket of anyone.
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Recent technological advances have created a digital environment that is almost solely devoted to the unauthorized use of copyrighted works. In other words, P2P network customers are primarily using the program to obtain music, movies, software, photographs and other works without paying for the product.
Let me be clear at the outset that I am not opposed to P2P networks. In fact, I believe that P2P networks have potentially beneficial uses that will play an increasingly important role in how business is conducted.
I am, however, opposed to the rampant stealing that is occurring on these networks. While not every download is an infringement, statistics clearly reveal that a vast majority of them are in fact illegal. Between 12 and 18 million movie files and 2.6 billion music files are downloaded for free on the P2P networks each month. And the U.S. Customs Service reports that certain elements within the online community are responsible for at least $1 billion annually in lost sales of computer games, business software, music, and movies.
This translates into huge economic losses for not just large media companies but also individual songwriters, photographers, graphic artists, and software developers all over the country.
The question, then, is, how do we stop the massive piracy on P2P networks? Today we will hear from the panel about potential answers to the P2P piracy problem and their implications.
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The gentleman from California, Mr. Berman, has developed one solution, which he believes will work. It is my understanding that this bill is intended to clarify that copyright owners may utilize new technologies to protect their property as it is distributed on P2P networks. No doubt the panel will also comment on the merits of the proposed legislation.
I'm also reminded of ongoing private negotiations between the content industry and the technology providers to find a technological solution to digital piracy. It is furthermore my understanding that the process nearly reached a consensus on a watermark technology for use on DVDs that could also have important implications for preventing P2P piracy.
I strongly support efforts by industry to resolve these issues through private agreements. I encourage both sides to redouble their efforts and to narrow their differences. And should this process fail to reach an agreement, it is very likely, I think, that this Subcommittee may well examine the reasons for its failure at a later date.
I anticipate that this hearing will provide lively debate on a complex and controversial issue. I look forward to learning more about the status of P2P piracy problems and potential solutions to the problem of digital theft.
I am now pleased to recognize the gentleman from Virginia, Mr. Boucher, for 5 minutes.
Mr. BOUCHER. Thank you very much, Mr. Chairman. Let me say at the outset that I appreciate the Subcommittee holding a hearing on the matter of music distribution across the Internet. But I'll have to confess a preference for a somewhat different focus than that of this particular hearing.
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There is a need, I think, for legislative action in this Committee to facilitate the lawful distribution of music across the Internet in a manner that assures that all owners of copyrights are paid. Mr. Cannon and I have introduced a comprehensive measure, the Music Online Competition Act, which, if enacted into law, would help achieve that goal.
The Copyright Office has also recommended legislation that would help achieve that goal. The recording industry can achieve that goal if it will simply place entire inventories on the Web for permanent, portable downloading at a reasonable price per track.
There's a recent Jupiter Media Metrix study that shows that two-thirds of the public values the availability of a broad inventory of music, the assured quality of the download, and the ability to keep the music permanently and move it from one player to another in the personal environment as more important considerations than price. These two-thirds of the public would clearly be willing to pay a reasonable price if the other elements of quality, availability, and portability are present.
In my view, the recording industry does not need the legislation which the Subcommittee is considering today. It should put entire inventories on the Web for permanent portable download at a reasonable price. That's the way to compete with the lower quality free peer-to-peer file-sharing services.
Turning to the bill at hand, I question at the outset what it is that the industry wants to do that would be authorized under the provisions of this bill that it can't do under current law. Spoofing is allowed now. Decoys are allowed now. Redirection to legitimate Web sites is allowed now. I hope that the witnesses will be very specific about what it is that the industry wants to do by way of self-help that it can't do at present.
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And I have some other questions. Would any of these intended self-help mechanisms harm innocent Internet users by perhaps slowing down the speed of a shared network, such as a cable modem service? Would any of these mechanisms permit the recording industry to intrude into the personal computer space of an Internet user? And if so, what are the implications of such intrusions for the privacy rights of individuals? If any damage is done to the hardware, software, or data owned by an Internet user, how would the damaged party know who to proceed against? After all, no notice to him is required under the bill that his space is being invaded or who is doing the invading. And so if he's damaged, how does he know who to recover from?
What assurance will there be that material which is protected under the fair use doctrine will not be blocked or removed by a self-help invasion? What are the implications for the Internet's functionality when the inevitable arms race develops and countermeasures are used to block self-help mechanisms? I can imagine that if the recording industry launches what amounts to a denial of service attack against Internet users, that denial of service attacks will, in turn, be launched against the industry, with broad, adverse effects on Internet speed to the disadvantage of Internet users generally.
These are a few of the matters that concern me. And I very much hope that these questions will be addressed by the witnesses this morning.
On a personal note, Mr. Chairman, let me extend to you also my thanks for the way in which you have conducted the business of this Subcommittee. You and I on occasion have disagreed on substance, but we've always disagreed agreeably. And I want to commend you, Mr. Chairman, for the fair and evenhanded way in which you have conducted the business of this Subcommittee. It's a pleasure serving with you in the Congress. I look forward to many future years of our service together, and I wish you well.
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Thank you.
Mr. COBLE. Thank you, Mr. Boucher. I appreciate that.
The gentleman from Virginia.
Mr. GOODLATTE. Mr. Chairman, thank you.
Mr. COBLE. If the gentleman would suspend, I appreciate, Rick, your meeting the 5-minute rule. If you all could work with 5 minutes, because we are going to be called to go to the floor ultimately.
I recognize the gentleman from the valley.
Mr. GOODLATTE. Mr. Chairman, I thank you also for holding this hearing on a very, very important issue which goes to the heart of the use of the Internet by the public and the need to protect valuable copyrighted works by the creators and owners of those works.
I have not yet co-sponsored this legislation. I am very, very concerned about piracy of copyrighted works. And I am very, very supportive of efforts to try to combat that. I am, as many of you may know, the author of the NET Act, which passed the Congress several years ago, was signed into law, that gives new tools to law enforcement to go after those who steal copyrighted works or give away for free the copyrighted works that do not belong to them.
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However, I am also concerned about what this legislation's implications are for the use of the Internet. Will it work, or will it simply cause an escalating war of various technologies that will not lead to the best utilization of the Internet?
I note the chart over there that indicates that those who promote these networks have already developed tools that will bypass some of the technology that those who would protect copyright want to deploy. They've already found ways to detect video files that are so-called spoof files or bogus files.
And so I want to know the implication of that. I hope these witnesses today will share with us their concern about that.
And I am very, very concerned about the misuse of P2P networks. I happen to think that they provide a very good service and a very good function for people to get access to a multitude of information that's in the public domain. However, for things that are not in the public domain, for things that are privately owned, like copyrighted works, they have, in my opinion, a responsibility to come forward and to deploy the technology that apparently would bypass and detect the spoof files obviously would also detect legitimate copyrighted files, and it should be deployed in a such a way to protect those files. And I'd like to know why that is indeed not being done to protect copyrighted works and why instead the largest peer-to-peer network, KaZaA, has fled the United States, via the Netherlands to Australia, and now finds itself on the island of Vanuatu as its principle location for doing business obviously for the purpose of evading the ability of those who would protect copyrighted works and enforce the laws of the United States and other nations to do so.
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So, Mr. Chairman, I will listen with great interest in how this legislation will work and want to hear from these witnesses and their opinion on the legislation and will reserve my judgment.
Thank you very much.
Mr. COBLE. I thank you, sir.
I am pleased to recognize the gentlelady from California for 5 minutes.
Ms. LOFGREN. Thank you, Mr. Chairman.
I think there's growing consensus that advanced peer-to-peer applications are the next killer application that will drive growth in the computer hardware, software and equipment industries as businesses and consumers demand faster and more powerful PCs. The P2P applications also have the potential to give consumers a reason to embrace broadband.
But today we're not here to discuss ways to harness the potential and encourage investments in peer-to-peer applications. We're here solely to focus on ways to help copyright owner and holders sabotage peer-to-peer networks if they think their works are being infringed.
Now, illegal file-sharing is a problem. But the breadth of the current proposal is of concern to me. Among other things, it seems to give copyright holders the power to launch denial of service attacks and other invasive self-help measures. It appears to authorize and make it easy for copyright holders to delete an individual's files if they receive authorization in a non-negotiable licensing agreement. And it would make it nearly impossible for consumers to seek redress against copyright holders that cause unwarranted damage, much less find out who caused the damage.
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One of the most disturbing parts of the current discussion to me is that the interests of consumers tend to be overlooked here in the halls of Congress. We have major industries, including technology and entertainment industries, but the consumers' interests sometimes don't get attended to. And while some would say there are millions of pirates—and there are people who are unfairly taking advantage of peer networks—we also know that millions of consumers want digital distribution. So we can debate the spoofing and the decoys and the interdiction, but the problem of online privacy will not be solved, in my judgment, until those who have content and those in the technology world give consumers what they want: digital distribution that is affordable, secure, and user-friendly.
The fact is that peer-to-peer networks, like the Internet, are here to stay. And I hope that this Committee will some day have the ability to explore ways to harness their potential so that users can get what they want and that content and copyright holders can be treated fairly.
I would also like to note, Mr. Chairman, how much I have enjoyed serving with you on this Subcommittee. We have not always agreed, but the disagreements have never been partisan. This has been sort of an island of nonpartisanship in an oftentimes choppy sea of partisan nuttiness.
And I would also like to thank Mr. Berman, who I admire a great deal and consider a friend. And while I do not support this current effort, I know that his motives are nothing but honorable. And I have a great hope that we will be able to pursue these issues agreeably and successfully in the next Congress.
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And I yield back the balance of my time.
Mr. COBLE. I thank the gentlelady. Thank you, Zoe, for your comments.
The gentleman from California.
Mr. ISSA. Thank you, Mr. Chairman. And I, too, would like to thank Mr. Berman for producing yet another bill that, although I do not co-sponsor it, in fact points up a problem that has not gone away, a problem that sooner or later has to be dealt with by this body.
I hope as we go through the hearing process and probably in the next Congress, that this bill or its successor becomes a bill that in fact we can all embrace.
I would like to say here today that I have the good fortune of knowing, I believe, the association executive who made those statements. And I would like to disassociate myself with anyone who believes for a minute that Napster was in fact not a very organized way of stealing intellectual property, just as KaZaA is an extremely good example of exactly what this body, this Administration, and both the copyright holders and the technology community must ban together, with laws or with association work, and prevent. And I would call on that association and others to redouble their efforts to find a solution that doesn't require a clumsy legal mandate.
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Mr. Chairman, I'd like to put my official opening statement in the record.
Mr. COBLE. Without objection.
Mr. ISSA. I would like to just comment on two things in opening, so that hopefully we set a tone for this.
First of all, I got on this Committee not because I'm an attorney but because, in fact, I was probably the only person to come before this body who ever was ripped off for their intellectual property, went to court, won judgments, enforced the judgment, collected millions of dollars that were taken from my company by people who had no respect for a piece of paper and felt that their product outranked our piece of paper, our inventions.
So I come here with a particular bent that in fact statements that were made here—which I do not want to insult people who made them; I think they were made without perhaps regard for the words. Statements like ''reasonable prices'' are in fact not part of the copyright, patent, or trademark debate. A reasonable price may be the price you charge yourself if you're charging others. That's a fair and similar price.
But I want to make it very clear that I for one will not ask that online services be mandated to meet an artificially different price. I believe they should. That's a personal opinion. But I think it's important that the copyright holders understand that if they choose to put their product on at $29.95 or at $.99, that is a business decision that they have to make consistent with the constitutional protection that they were clearly granted by our Founding Fathers.
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And I think as we go through the debate, hopefully we can eliminate this theory that piracy is the result of unreasonable prices by the copyright holders. I think that's often something that slips into the debate. And although certainly you can undercut the pirates to a certain extent, you can never get below someone who didn't pay for the product, and particularly on the Internet.
In closing, Mr. Chairman, I think that this legislation being talked about is the most important thing that we can do in this Congress. But in the next Congress, if we cannot orchestrate industry-led solutions, I have no doubt that this Committee must act and must find a piece of legislation that is as least flawed as possible. And I look forward to working with all parties on that.
Thank you, Mr. Chairman. I yield back.
[The prepared statement of Mr. Issa follows:]
PREPARED STATEMENT OF THE HONORABLE DARRELL E. ISSA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Thank you Chairman Coble for holding this Oversight Hearing on ''Piracy of Intellectual Property on Peer-to-Peer Networks (P2P).''
I thank the Ranking Member of this Subcommittee, Howard Berman from California, on introducing H.R. 5211, which is an attempt to address the issue of P2P networks and piracy. I hope that this legislation helps to shine some light on a very important issue.
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As a former businessman who owns numerous patents and trademarks, I understand the need to protect intellectual property. When I encountered infringers of my trademarks or companies that stole my patents to market their products, I was forced to litigate. Unfortunately, the copyright owners, because of the presence of P2P networks and the proliferation of new online users downloading pirated material, have had to follow the same course as I and have not been as successful.
Since the introduction and immediate success of Napster, the Internet has been viewed by many as a means to download free music. Now, with the demise of Napster, new P2P networks, like Kazaa, Morpheus, BearShare, Grokster and Gnutella, provide channels for downloading music and movies with digital quality. The ease in which one can download pirated material is disheartening for me as an intellectual property owner.
Copyright owners have attempted to discourage the piracy taking place on P2P networks by different means including litigation and most recently, interdiction, redirection, decoys and spoofing. Still, P2P networks are successfully evading the law by fleeing to foreign countries or taking refuge on offshore locations. Unfortunately, with each illegal P2P network that is shut down a new one takes its place. Each new P2P network seems to be a more decentralized program that will be more elusive to litigate. In the not-too-distant future, we will see other programs that will provide pirated material on bigger, better, faster nodes. The status quo is not acceptable for the copyright owners, nor is it in the interest of the American People.
Without swift action, P2P networks that advocate pirating copyright material, without just compensation of any sort, will continue to be pervasive on the Internet. An industry-led solution is needed, but it will take coordination from the copyright owners, the consumer electronics industry and the software manufacturers in order to be successful. Collectively, they have the technology and ability to confront the infringement of copyrighted material on P2P networks. If a unified solution is not brought forward soon, or no consensus can be reached, I have no doubt Congress will be forced to pass legislation that is ''least flawed'' to address this problem.
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As we begin this journey, I encourage this subcommittee to hear testimony from additional witnesses, including content holders, software manufacturers and the consumer electronics industry. Their involvement is very important if we are to curtail piracy. I want to work with Chairman Coble and the next chairman of this committee on H.R. 5211 and any other bill that provide the tools necessary for fighting piracy that we can all embrace. H.R. 5211 will help to focus the attention of the members of this subcommittee and an issue that is spiraling out of control.
I thank the Chairman for scheduling this hearing today and look forward to the testimony of this distinguished panel of witnesses.
Mr. COBLE. I thank the gentleman.
The Chair is pleased to recognize the distinguished gentleman from Massachusetts.
Mr. DELAHUNT. I don't have an opening statement, Mr. Chairman. But let me join the others that have appropriately sung your praises.
As my friend Zoe Lofgren indicated, I think her reference was an island of bipartisanship in a sea of controversy. Oh, how eloquent and poetic and true.
You have earned the respect, the admiration, and the friendship of all of us who have served on this Subcommittee.
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Mr. COBLE. You all are making an old man feel mighty good this morning. Thank you, Bill.
And I notice most of my accolades are coming from the Democrat side, not the Republican side. [Laughter.]
Mr. DELAHUNT. That's why we call it an island of bipartisan. [Laughter.]
Mr. COBLE. I thank you, Mr. Delahunt, very much.
Mr. ISSA. Howard, we know you're not going anywhere. You're just ending your Chair. We kind of figure we'll still have you around to sing your praises.
Mr. COBLE. Oh, very well. [Laughter.]
The gentleman from Florida.
Mr. KELLER. Thank you, Mr. Chairman. I, too, join in appreciation of your good work as the Chairman.
I think there is unanimity in the concept that stealing is bad and there should be consequences. But as a practical matter, other than this self-help bill that Mr. Berman has drafted, I'd like to hear what the solutions are from the witnesses. And when I say the solution, just a practical solution, not legal mumbo-jumbo because this is the way I as a layman see it: Universal wants to put out the new Celine Dion CD, let's say. So they ship the CD off to radio stations 4 months in advance to promote their best single, what they perceive to be their best single. I think it was called ''A New Day.'' And some college student, an 18-year-old kid, at one of these radio stations borrows that CD for the night and puts it upon the Internet, brings it back the next day. And so 4 months before this CD is released, it's available on the Internet for free.
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The question is, what do we do here? What's the remedy?
Well, criminal enforcement has been mentioned in some of your statements. We can ask Ashcroft or our local prosecuting attorney to do something about it. And they'll probably that they're sure sensitive to this but they have murders and terrorists and Mafia kingpins and drug lords that they have to prosecute with their precious dollars. Civil enforcement has been mentioned as a second remedy. They could hire a Sullivan & Cromwell and spend $200,000 and get a judgment against this kid, and he certainly has no money to pay it. So that's money down the drain.
It would probably be a PR nightmare for Celine Dion to go after this little kid.
There's the use of licensed services that are legal. Well, that's a great concept, I think. But why would people pay $20 a month when they can get it for free over the Internet?
The fourth thing, maybe Congress should come up with some technological solution for the industry. There are a lot of smart guys around here, but I don't know how many Ph.D.s we have who spend their free time coming up with secretive, complicated encryption devices that are going to work.
I wish Lindsey were here, because he's fond of saying that he got 800 on his SATs and he's one of the smart ones here in Congress. [Laughter.]
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So we're left with technological self-help measures. And that to me is about what you're left with. And if that's not the solution, then please tell me, as a practical matter, what is the solution, in your testimony, because I can't see any other solution.
So thank you for coming here today.
Mr. BERMAN. Would the gentleman yield?
Mr. KELLER. Yes, I'd be happy to.
Mr. BERMAN. I was just curious why you thought you could get that firm to get that judgment for $200,000.
Mr. KELLER. I know that's cheap, for any of the firms. I don't want to do promotion for them.
But please advise me on the practical solutions, because I'm certainly interested.
Mr. Chairman, I'll yield back.
Mr. COBLE. I appreciate that.
I'm told that we have a vote on, but I think I can recognize——
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Mr. BERMAN. That's just the warning.
Mr. COBLE. I stand corrected.
The other gentleman from Florida, Mr. Wexler.
Mr. WEXLER. Thank you, Mr. Chairman. I would like to join in the chorus of people who have applauded the way in which you have conducted yourself as Chairman of this Subcommittee. Your evenhandedness and decency and fairness is all too uncommon in this process. And it has been a great honor to be a part of your Subcommittee.
With your permission, Mr. Chairman, I would like to use my time for a brief demonstration.
Mr. COBLE. Without objection, that will be done. And thank you for your comments, Mr. Wexler.
Mr. WEXLER. Thank you.
Before the issue of peer-to-peer piracy came up, I for one had never heard of peer-to-peer networks or MP3 files. And I thought it might be helpful to walk the Subcommittee through a demonstration of just how easy it is to download pirated music from these peer-to-peer networks. And the Members, if they wish, can follow on the screen.
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Once someone downloads a peer-to-peer program like KaZaA, downloading pirated music is as easy as surfing the Internet. This search you are watching was taped two nights ago. The reason this demonstration had to be taped is that the House of Representatives has a firewall to prevent peer-to-peer network activity because these networks are too risky for security and piracy reasons to be considered safe for use on House computers.
So as you can see on the bottom right-hand corner of your screen there, this search is a recording from Tuesday night at 8:23 p.m. All you have to do to steal copyrighted material is click the search button and type in the name of the song or movie you want to download.
Since we have a copyright owner testifying before this panel this morning, we searched for the song that Mr. Galdston wrote for Vanessa Williams, ''Save the Best for Last.'' We just type in ''Vanessa Williams,'' ''Save the Best for Last.'' All of these hits come up. Each one of these lines is an MP3 file that has been uploaded to the peer-to-peer network without the permission of Mr. Galdston. And if Mr. Galdston will forgive us, we can just double-click any of these titles to download the song onto that computer right there.
While we wait for the song to finish, let me point out, as you can see on the bottom of the screen, when we recorded this demonstration, we weren't the only ones. Almost 3 million users were online stealing music, so-called sharing, almost 500 million individual files. This is just an ordinary Tuesday night in America on one of the many popular peer-to-peer networks. It is mind-boggling to realize that tens of millions of songs are being stolen every night in America.
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In only a few seconds we were able to steal the property of Mr. Galdston. We have a copy of the song as an MP3 file at near-CD quality. We can burn it onto a CD with other downloaded songs or share it on other peer-to-peer networks ourselves.
Anyone can download music and movies. It's easy. Sharing music and movies on peer-to-peer networks appears to have no negative consequences. You can get the entertainment you want for free and it seem harmless enough. Not so.
Mr. Galdston and all the other songwriters and musicians who make their living writing and recording music get hurt. Without the income from their copyrighted property, many musicians will not be able to continue creating the music we love to listen to, and we will lose this important American business. We will lose this integral part of American culture as well.
And the impact is felt by more than just the copyright owners. Local music and movie stores are facing dramatic drops in sales. With the economy as it is, we cannot afford do allow peer-to-peer theft to cripple the American economy or to stunt the development of new music and movies.
As you can see on the chart next to the screen, 2.6 billion—billion—songs are downloaded every month. KaZaA brags on its own Web site—this is KaZaA—that over 120 million users have downloaded its software.
And the problem is not limited to songs. Between 12 and 18 million movies are downloaded from peer-to-peer networks each month as well.
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One-half of all teenagers in America have downloaded music for free, with two-thirds of them saying they buy less music now that they can essentially steal it over the Internet so easily.
I am a sponsor of Mr. Berman's bill because given the severity and magnitude of the problem, we are left with no choice but to take action. Every one of these 2.6 billion downloads per month is a theft no different than going into a store and putting into you bag and walking out without paying.
We cannot realistically expect the criminal justice system to prosecute these cases. We need the Berman bill so that the copyright owners can protect their property themselves, just as individuals are allowed to protect their possessions from theft.
Thank you, Mr. Chairman, your indulgence.
Mr. COBLE. I thank the gentleman from Florida.
Mr. GOODLATTE. Will the gentleman yield?
Mr. COBLE. The gentleman's time has expired. We'll get to this in a minute.
The other gentleman from Massachusetts, Mr. Meehan.
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Mr. MEEHAN. Thank you, Mr. Chairman. And I, too, want to join my colleagues in thanking and congratulating you for your outstanding service to this Committee. Today is really ''Howard Coble Day'' in the House of Representatives. And I thank you for your outstanding leadership.
I also want to thank the Chairman for calling this hearing, as well as Congressman Berman, for taking the lead on the issue of peer-to-peer piracy.
Peer-to-peer piracy is theft, period. The illegal downloads of free music, which we've just seen demonstrated, of music software, movies from an Internet site, is really no different than lifting a CD or a DVD off the shelves of a Best Buy. And when you have two identical products—one that is free that you can download, as millions and millions of Americans apparently are, and then you have another one that has a price tag—obviously, free wins every time.
And throughout all of the debate over this issue, I've yet to hear a single person dispute those simple facts. Instead of admitting those basic facts and trying to find a common solution, we have seen a whirlwind of charges hurled at the Chairman and Congressman Berman. In fact, I've rarely seen the amount of vitriol, unsubstantiated charges surrounding a piece of legislation as I've have with Congressman Berman's bill. And it kind of makes me wonder: Has anyone really read this bill?
If your goal is to preserve peer-to-peer piracy, then just come out and admit it. If at heart you simply don't believe in intellectual property, then just say so.
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I agree that the content provider community has been too slow in finding ways to offer their products digitally. And I'm willing and eager to listen to amendments to this legislation. Certainly, no bill is perfect. But if you have a good-faith, reasonable alternatives, then I'm more than willing to hear them. But we have to take a first step, if we believe in American music and believe in American entertainment.
I mean no offense to countries with weak intellectual property laws, but I would much prefer to watch a movie from Hollywood than average fare from Taiwan.
This bill is a good first step toward stopping a very serious problem.
Thank you, Mr. Chairman.
Mr. COBLE. Thank you, Mr. Meehan. And thank you for your kind words as well.
The gentlelady from Wisconsin.
Ms. BALDWIN. Thank you, Mr. Chairman. I, too, would like to acknowledge the good humor and graciousness with which you have chaired this Committee and your very capable stewardship.
Times have certainly changed since I had my cassette tape recorder sitting beside my radio, and I sat beside both, ready to dash to the record button when my favorite song came on.
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In acknowledging the challenges faced by the industries represented at the hearing today, I know that we are truly searching for constructive answers. I look forward to the testimony and joining the Committee Members in fashioning the appropriate solutions.
Mr. COBLE. I thank the gentlelady.
The gentleman from New York.
Mr. WEINER. Thank you, Mr. Chairman. I want to join in the accolades being paid to you. And I also find it unusual that no one has commented on your exotic, Southern, I guess it's Staten Island accent that you govern this Committee with. [Laughter.]
And I want to thank you for how well you have conducted these hearings.
At the same time that many of us have reached the conclusion that the best policy for Government to take in the explosion of the Internet was probably to take a few steps back and to allow some of the technological problems, some of the content problems that troubled folks, to be worked out by the marketplace, worked out by technological solutions, we've seen a certain level of schizophrenia about this problem. At the same time that music companies and producers are trying to figure out ways to stop this pirating of intellectual property, just about every day in the newspaper or on television you see hardware makers advertising that their products will make it easier for you to break the law.
When you have an iPod advertised that you can have 3,000 songs, rip it, zip it, and go, or something like that, you know, it is clear that, on one hand, technology is working to make it easier to commit these crimes, to make it easier to commit piracy. When you have that dopey guy from Dell telling you how great the system is. It lets you go to campuses and how it can download faster than any previous technology. And then you see in super-microscopic print, ''Please be sure to observe all the copyright laws of the land,'' in the tiniest of print in print ads, and it zips across the screen in the TV ads. It is clear that there is an intramural battle going on in the technology community.
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And frankly, I think we in Government can no longer step to the sidelines.
At the same time, music companies have tried to give consumers what they what and, frankly, have done a crummy job. You know, I signed up for Pressplay a couple months ago, and the thing was loading and loading. And it has this icon that goes around that says, ''Please wait while we load the program.'' And it was going for hours and hours. And finally, I called someone to find out what was going on, and they said, ''Oh, you have Netscape. We don't work with that browser.''
It is getting better. But at the same time the music companies are coming out with improved products to help consumers, Morpheus has another version out, KaZaA has a better version out. I mean, there is a battle going on, a fullthroated battle going on not only between technologies but even within technology companies. I mean, if you have Sony who makes the computers and the downloaders and the minidisk players, and they're also producing music, it is not even clear the companies are on the same page about how to deal with this problem.
I have to confess that when I first heard about Mr. Berman's bill, I was, like, that's tough stuff, that I'm going to go and somebody is going to be scouring these peer-to-peer transactions and saying, ''I don't like this guy. I'm going in there, and I'm going to stop this from happening.'' But I think it is evidence that I think the panel and those that listen to this hearing, it should be very clear that Congress is not going to sit in watch this go on much longer.
And I agree with, I believe it was Mr. Meehan, who said that no one has made a good argument to me about why this should be allowed to continue. No one has made a good argument to me about why my good friend Britney Spears is wrong, that you can't just go into a record store and grab what you like and say, ''Well, the other 12 songs are crummy, so I'm going to grab this CD anyway.''
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You know, I believe that the industry obviously has to give consumers what they want. But I think it clear, whether you believe in the line-by-line explanation of the Mr. Berman's bill, it is clear that he reflects the sentiment of Congress and, frankly, I think of all moral American consumers that we cannot allow this pilfering to continue unabated.
I yield back the balance of my time.
Mr. COBLE. I thank the gentleman from New York.
And we've been joined by the gentlelady from Pennsylvania, who tells me she has no opening statement.
I thank the Members for your opening statements. I appreciate that.
And now we will get to the business at hand. Our first witness is Ms. Hilary Rosen, who is the chairman and chief executive officer of the Recording Industry Association of America, popularly known as RIAA, the trade group representing the U.S. sound recording industry. She was named president and CEO of RIAA in January 1998 having been with the organization for more than 11 years. Prior to joining the RIAA, Ms. Rosen operated her own consulting firm. She holds a bachelor's degree in international business from the George Washington University.
And by the way, folks, pardon my gravelly voice, but I am coming down with my annual autumn cold, so I know it sounds not favorable.
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Our next witness is Ms. Gigi Sohn, who is the president and co-founder of Public Knowledge, a new nonprofit organization that will address the public's stake in the convergence of communications policy and intellectual property law. Ms. Sohn also served as executive director of the Media Access Project, a Washington-based public interest telecommunications law firm. Ms. Sohn holds a B.S. degree in broadcasting in film, summa cum laude, from the Boston University College of Communications and a J.D. from the University of Pennsylvania School of Law.
Our next witness will be Mr. Phil Galdston, who is a songwriter-producer whose work has appeared on over 60 million records worldwide, in countless motion pictures, and on recordings by several famous artists. His song ''Save the Best for Last,'' recorded by Vanessa Williams, simultaneously reached number one on Billboard's three major charts, and received four Grammy nominations, including song and record of the year.
Our final witness today is Mr. Randy Saaf, who is president and chief executive officer of MediaDefender Inc., makers of Internet and peer-to-peer anti-piracy software. Mr. Saaf attended the Harvey Mudd College School of Engineering in Claremont, California, and worked in software development at Raytheon Systems. At Raytheon, he helped to create more cost-effective solutions for developing radar software for the F–15 fighter jets.
It's good to have all of you with us. We have your written statements. They have been examined and will be reexamined, I assure you.
Again, folks—Hilary, you know this. You've been here before. I'm not sure the others have. But we would appreciate your confining your statement to the 5-minute rule, if you will. And you will know your time has expired when the red light before you illuminates into your eyes. [Laughter.]
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Ms. Rosen, why don't we start with you?
STATEMENT OF HILARY ROSEN, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, RECORDING INDUSTRY ASSOCIATION OF AMERICA
Ms. ROSEN. Thank you, Mr. Chairman. And I'll submit my record statement for the record.
I have to join your colleagues, if I might, and add my personal and certainly our industry's respect and appreciation for your chairmanship. I think there are few legacies in this Congress, in many Congresses, that will match yours.
Mr. COBLE. Ms. Rosen, we may have to give you 10 minutes. [Laughter.]
Thank you, Ms. Rosen. I appreciate it.
Ms. ROSEN. The breadth of the creative output that results from the work that you've done coupled with I think the real balance you've achieved and strove for in technological innovation I think most importantly serves the public interest on all fronts. And I think the public has never been more satiated with creative works and the U.S. economy has never benefited more.
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Congressman Berman, thank you for introducing this bill and stimulating this hearing on this extraordinary important problem.
America's copyright industries, it's always appropriate to remind this Committee and the public at large, account for over 5 percent of our Nation's GDP. Over the last 25 years, these copyrighted industries have grown at twice the rate of any other American industry, responsible for over 5 million jobs, provided the most favorable balance of trade to the U.S. economy than any other single industry, outpacing aerospace and agriculture in that regard.
The policies of this Committee to date have been responsible for that growth, and I urge you to continue that strong leadership.
Music is this first in this online piracy problem. Everybody knows it. We're getting a lot of attention lately, but every other copyright work, from needlepoint to books to film to software, will be where are shortly, if we don't all pay more attention to this, because the economic engine that has driven these industries is at risk.
New business models in the legitimate online music market cannot compete. They are urgently threatened with the exponential growth of illegal piracy on peer-to-peer networks. The networks certainly impact equally on the security and safety of the users' own computers and their own private information, and that is in no way an indictment of the network itself. They're perfectly legal. It is the use of the networks that are most at risk. That certainly doesn't dissuade anyone from the notion that the concept of P2P and distributive computing has enormous commercial potential and enormous potential for consumers.
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Finally, there really is no easy solution. There's no single bullet, as Mr. Keller sought. Frankly, I'm not even here to blame anyone, other than perhaps the network providers themselves who know exactly what they have created in order to profit on it.
Rather, self-help in the music business has been our internal mantra of late. And we have looked at that self-help in four different ways.
The first is business strategies. There is no substitute for giving consumers what they want. The record industry, it has been repeated multiple times, was slow to get there. But now there are legitimate services up and available. They clearly don't have as much music as the pirate services, because they don't have to worry about finding copyright owners to make sure that they get paid and are licensed. But they're there. And in fact, they are growing, and they're good music experiences today. They'll be better music experiences in several months. There are download services available now and already have been announced for significantly low prices; you know, less than a dollar a single. I think that that record of licensing over the last year speaks for itself.
The second strategy really are technical measures. We have to look at things like spoofing. The New York Times yesterday gave credit to spoofing for spurring the development of the legitimate marketplace, exactly what this Committee and what everybody should want to achieve.
Unfortunately, this week, we saw this announcement, that Sharman Networks in their new KaZaA download has decided that they're going to hamper spoofing. They can get away with technical measures against us, but all of this public outcry about technical measures to support ourselves.
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So spoofing has been effective, but it is at risk. Because of this, we have to be able to keep up.
The second, obviously, is enforcement. I strongly believe the Federal Government has a role in enforcing criminal penalties. And the NET Act was an important step. The Justice Department has already announced their intention to be more aggressive in this area. They recognize the national economic threat, the national security threat. And we applaud that action.
On the civil enforcement side, we've taken a lot of self-help. We have been very aggressive, spent a lot of money, and sued a lot of networks. Those suits have generally been successful. The problem is, there are just too many to consistently sue, and people have to understand that burden.
And finally, public education. We've done a lot of research over the last couple of months about consumers and attitudes and views about this practice and its impact on the marketplace and what consumers really need to hear. Since so much of the growth in peer-to-peer network use has been in the 12- to 18-year-old category—in fact, 18- to 30-year-olds, the activity has generally been about the same in the last 2 years. What we're seeing is tremendous growth in the 12- to 18-year-old. That means, as parents buy broadband and DSL and cable online services for their house, their kids are using that to go upstairs and steal music.
What people really wanted to know is, is it legal or not? And the courts have spoken: It's not legal.
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What the music community has done this week is launch a public education campaign based on that specific area of education. We are telling people what their rights are. We're encouraging people to think about what playing fair is. And we're telling them when their behavior is illegal.
And this newspaper ad appears today in several national newspapers. It says, ''Who really cares about illegal downloading?'' And it's signed by 90 artists, most famous but some not so famous. The famous artists obviously trying to send the message on behalf of those young artists and coming-up artists that there is a long-term concern for the music community.
There is a Web site, MusicUnited.org. And this effort has brought together every single significant organization in the music community, many of whom this Committee has seen fighting among ourselves every day of the week on other issues. This issue unites us.
So I encourage people to take a look at this campaign over the next several weeks. You will have seen small retailers talk about this problem. You will see economists talk about this problem. You'll hear songwriters and fans talk about this problem. This is a serious problem, and this Committee bringing this problem to the public's attention is enormously important, so thank you very much for today's hearing.
[The prepared statement of Ms. Rosen follows:]
PREPARED STATEMENT OF HILARY ROSEN
Mr. Chairman, Representative Berman, and Members of the Subcommittee, I want to thank you for holding this important hearing today. This is the first hearing Congress has held to specifically examine the effects of copyright theft over peer-to-peer networks on the Internet.
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And as a representative of the industry that has been so far the hardest hit by this enormous problem, I am deeply grateful to this Subcommittee for taking the lead in focusing on what is becoming an epidemic for the American economy and culture.
Just to give you an idea of the amount of copying that is occurring on unlicensed, free peer-to-peer systems—the most popular network, KaZaA, boasts on its site that its file-sharing software has been downloaded more than 120 million times. It is estimated that more than 2.6 billion files are copied every month—and no creator, no property owner is compensated for these copies.
I wish I could tell you that there is a silver bullet that could resolve this very serious problem. There is not. The answer resides in a combination of efforts that must be undertaken at the same time: 1) extensive public education about the illegality of file-sharing; 2) the widespread availability of licensed services that consumers desire; 3) criminal and civil enforcement; and 4) technological self-help measures that prevent illegal copying and make it less desirable. These are all essential parts of assuring the vitality of our copyright system and the incentive to create new works.
We begin with education. Polls show that many Americans still do not know that downloading an artist's song on one of these unlicensed services is unlawful. And the message is clear—taking music on the Internet is no different than taking it from a store. The law protecting the right to reproduce a creative work applies on the Internet in the same manner in applies to sales of illegally made CDs on the street.
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I want to emphasize that technology is not the enemy. Peer-to-peer technology holds amazing promise for creators and consumers to experience entertainment and to communicate in ways never before available. It is the misuse of technology—employing it to deprive compensation to creators—that must be tackled.
For the past two years, record companies have been working with download sites and new subscription services to create a legitimate alternative to piracy networks. There now exist dozens of places on the Internet to download authorized music and a dozen new competing on-demand monthly subscription services, all of which pay the creators. They are not yet perfect. In the legitimate world, it takes time to negotiate licenses in the free marketplace, to develop secure encryption and digital rights management systems, to negotiate with all rights holders, to develop new royalty payment systems, and to organize and digitize for new delivery our vast music catalogs. Pirate systems face none of these obstacles. While in Internet time it may seem like an eternity, in only three years we are well on our way to transforming an entire industry.
Enforcement of creators' rights is another key component. I want to thank all of the Members of this Subcommittee who signed a letter to the Department of Justice urging that they prosecute those who create systems intentionally developed to enable theft, and to prosecute those who intentionally steal through peer-to-peer services. And we applaud the Department for its recent announcement explaining that theft on these systems is no different than theft through a different medium—and that they will prosecute copyright crimes on peer-to-peer networks. In addition, in the civil courts, we have brought suit against the most popular peer-to-peer services for mass copyright infringement. We are pleased that the courts have ruled that services such as Napster and Aimster must be held accountable. The Judge in the Aimster case recently summed it up best when it said that Aimster ''managed to do everything but actually steal the music off the store shelf and hand it to [its] users.'' We are hopeful that the courts will come to the same conclusion in the case we have filed, along with the movie studios and the music publishers, against KaZaA, Morpheus and Grokster. Enforcement alone, however, is not enough. We must be able to technologically prevent the illegal downloading of our creations over these systems.
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That is why I also want to thank Representative Berman and cosponsors for introducing a bill that is intended to level the technological playing field by assuring that copyright owners can take preventive measures that will deny the downloading of their works when it is not authorized—without invading a user's privacy or damaging a user's computer or network.
An example of why it is so important to give copyright owners the ability to defend themselves with the same technological measures used by pirates to encourage theft came just this week when KaZaA announced that it was giving its users ''better options and more tools than ever before . . . include[ing] a filter to help users avoid . . . misnamed or incomplete files that may have been uploaded by record labels and copyright owners trying to frustrate file sharing.' It is truly ironic that we can be stopped from trying to protect ourselves against unlawful copying by technology, but using technology to prevent unlawful use is met with a firestorm of controversy. It is also ironic that KaZaA can employ a filter to avoid spoofed files, but not to filter out copyrighted works to which they have no right.
Unfortunately, there has been a lot of misinformation about this bill. Some have characterized it as allowing copyright vigilantism, or letting record companies and movie studios hack into people's computers, and crash networks. These irresponsible descriptions at best reveal a misunderstanding of the text and purpose of the bill, and at worst purposely cloud the real issues and problems with unlicensed peer-to-peer networks. It is the use of a peer-to-peer system that opens up a user's hard drive to the rest of the world, not the Berman bill. It is the current practice of those who have created today's unlicensed peer-to-peer systems that invade a consumer's privacy through spyware and the selling of consumer information, not the Berman bill. In fact, the bill prevents these activities, along with hacking, deleting or altering material, and causing damage to a computer. We support these prohibitions and other solutions to assure that all privacy and damage concerns are addressed. But we ask that those who share these concerns with us help us to come up with real solutions that also curtail massive piracy over these networks.
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The intent of the bill, it seems to us, is simply to allow a copyright owner to prevent the initial downloading on a peer-to-peer system of specifically identified material that it owns. An analogy might be a U.S. Coast Guard boat that is out in the sea preventing unlawful goods from entering the United States. It is not doing damage to the sender or the intended recipient, it is not boarding any other boats, or initiating any harm. It is simply acting in a defensive manner to block admission and to deny an illegal transfer. In our opinion, this preventive activity is warranted and necessary.
Many of these types of activities are already allowed under current law, and copyright owners are availing themselves of their rights to protect their works. But some laws that were written at a time when peer-to-peer networks were not even contemplated have created some unintended confusion and ambiguity. It is sort of like a statute that was written to protect bank statements in the 1950s being applied to measures utilized to protect ATMs today. The Berman bill will clear up any uncertainty in both the application of current law and the respect that copyright owners must and should have for the integrity of networks and an end user's privacy.
We, like others, have many questions about the application, scope and exposure to copyright owners in the bill. But we are committed to working with the Subcommittee to resolve these questions and to work with those who have raised other legitimate concerns.
And we are also committed to working with all parties who have a stake in creating a legitimate digital marketplace that will continue to make possible the gifts that music has brought to listeners around the world.
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I would like to close, Mr. Chairman, by noting that, because of term limits, this may be the last time that our industry has a chance to formally appear before you as Chairman of this Subcommittee. To call your tenure as Chairman extraordinary in the formation of modern copyright law would be a gross understatement. Your leadership is responsible for future creations that we have not even imagined. And your legacy is appreciated by all of us who are involved in the creative arts. We salute you and thank you.
Mr. COBLE. Thank you, Ms. Rosen. And thank you for your generous comments as well.
With a sense of fairness, Ms. Rosen consumed 7 minutes, so I will allot each of you 7 minutes as well.
So, Ms. Sohn?
STATEMENT OF GIGI SOHN, PRESIDENT, PUBLIC KNOWLEDGE
Ms. SOHN. Thank you, Chairman Coble, Congressman Berman.
Mr. COBLE. If you will suspend, Ms. Sohn, you don't have to use 7, but you may use 7. [Laughter.]
Ms. SOHN. I think I probably will.
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Thank you, Chairman Coble, Congressman Berman, and the Members of the Subcommittee for holding this very important hearing. I am honored that you've chosen me and my organization to represent the consumer perspective on P2P networks.
We share your concern about massive illegal file sharing over P2P networks. We condemn such actions and favor targeted mechanisms to limit them. I emphasize the word ''targeted.'' We cannot support laws or technological measures that harm legal uses of computers and the Internet.
Unfortunately, H.R. 5211 is not a targeted measure. We recognize and appreciate the good intentions of Congressman Berman and the other co-sponsors in attempting to limit unlawful file sharing over P2P networks. But this bill would permit copyright owners to employ self-help technological measures at the expense of all Internet users, whether or not they're engaging in illegal activity and whether or not they're using the type of P2P networks that are the purported subject of this bill. It is especially troubling that these measures can be employed secretly without any notice to the affected consumer as to who is engaging in self-help or why.
Let me tell you what concerns us. One technique, interdiction, involves a program robot, or bot, that repeatedly requests an allegedly infringing file a P2P user, making her hard drive inaccessible. Sounds benign? Well, what if the bot is just wrong about whether a file is illegal?
The content industries say that their bots are accurate. But when Warner Brothers twice asked an ISP to disable access for a file trader that had a 1k file named ''harry potter book report.rtf,'' did it really believe that such a small text file was anything but a child's homework?
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And remember, the rights in this bill redound to all copyright owners. So while the content industries may have the means to use more expensive and accurate self-help, others will use whatever homebrewed tactics they can afford.
And what if these or other future self-help techniques result in file trader's computer crashing or her Internet service becoming unavailable? Regardless of whether an individual has an infringing file, denial of service caused by self-help will burden ISPs and other network users. Every denial of service claim requires ISP time and resources to figure out its source, causing it to spend less time on other more serious service problems.
Moreover, denial of service attacks on ISP networks using shared architecture could directly affect the service quality of other ISP customers.
The anti-consumer effects of this bill do end there, unfortunately. Even in the unlikely event that an innocent victim of self-help can figure out who among the millions of copyright owners is responsible, the bill erects economic and procedural barriers to seeking relief in the courts. This is true even the when the copyright owner's actions are the most egregious.
These obstacles and the broad authorization granted to copyright owners under this bill shift the burden of using self-help away from the content industries and places it squarely on the backs of consumers.
What H.R. 5211 could sanction is a virtual Wild West. Attacks on hard drives will likely provoke retaliation by some users and the acquisition of defensive software by others. The collective impact of all these efforts might be to reduce or eliminate the effectiveness of the Internet and delay the rollout of broadband.
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So if H.R. 5211 is not the right answer, what is? I recommend four solutions, all of which are currently available to content industry.
One, enforce existing laws. This is the ultimate self-help technique. We are not aware of one case in which the recording industry has taken legal action against an individual downloader. The problem is that the industry apparently does not want to enforce the law when it comes to illegal file trading because it looks bad to sue its own customers. But it's not Congress' job to protect any industry from negative public relations.
Two, employ noninvasive self-help. We support the use of self-help techniques that are activated by an individual's affirmative effort to obtain an unlicensed copy of a file, including spoofing, flooding, decoy, and redirection.
Three, promote competition to build a new business model. There appears to be a growing consensus that online music services that provide easy access to a wide range of high-quality content at a fair price can compete with free. The New York Times reported yesterday that more and more file traders are using legal online music services in part because file sharing is, in the words of one convert, a dreadful experience. In fact, Jupiter Research predicts that by 2006, the industry will reap more than $1 billion from these services. Forrester Research puts that estimate at $2 billion.
But more can be done to expedite a better business model for selling music online. One way is for the recording industry to give others the opportunity to sell music online, not for free. The record companies could license their music to online retailers and ask for the same statutory rate that the publisher gets for each song sold.
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This is a win-win situation. The copyright owner gets paid, and a competition ensues to build a viable online music service. The Music Online Competition Act, which is currently pending before you, is an important step in the direction of increasing competition in the lawful delivery of online music.
Four, educate the public about digital copyright. I applaud the recording industry on the educational campaign it has started today. The content industries have some of the world's biggest and best public relations capabilities. They should use them to give the public truthful information about what is legal and illegal in a digital world.
I want to again thank Chairman Coble, Congressman Berman, and the Members of the Subcommittee. As the sole representative of citizens' rights at this hearing, I respectfully ask that you keep the record open for 30 days to permit others to submit testimony and comments.
[The prepared statement of Ms. Sohn follows:]
PREPARED STATEMENT OF GIGI B. SOHN
Chairman Coble, Congressman Berman and other members of the Subcommittee, my name is Gigi B. Sohn. I am the President of Public Knowledge, a new nonprofit public interest organization that seeks to ensure that citizens have access to a robust public domain, an open Internet and flexible digital technology.
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I want to thank the Subcommittee for holding this important hearing on the great promise of peer-to-peer (P2P) networks and some of the perils associated with their use. I am honored that you have chosen my organization to represent the citizen/consumer perspective at this hearing. [1]
My hope is that this hearing will further advance the dialogue that Public Knowledge and other public interest organizations have already begun with the various interested industries and with policymakers. That dialogue is intended to find solutions that provide the content industry with a ''reasonably secure'' digital environment for its content while ensuring that citizens retain their rights under copyright law and continue to have access to an open Internet and the kind of flexible technology that they have come to expect and enjoy.
P2P TECHNOLOGY IS CHANGING THE FACE OF COMPUTING—FOR THE BETTER
In just two years, P2P has become a computing phenomenon. Millions of Internet users are communicating with each other through P2P file sharing software programs that allow a group of computer users to share text, audio and video files stored on each other's computers. While the P2P applications we know today are just a few years old, the technology underlying P2P is at the heart of the Internet. The Internet was designed to be a distributed system of linked computers in which users could freely share content and data stored on each other's computers.
Few disagree that P2P networks are already changing the way businesses, educators, artists and ordinary citizens use their computers. In businesses, for example, they offer an alternative to centralized server-based sharing of documents and projects. [2] The vast majority of these changes are positive. By linking together individual computers and distributing their power, P2P technology is superior to the centralized server approach because it:
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is more robust and resilient
is more cost effective
is faster and more reliable
harnesses bandwidth and storage resources that would otherwise go unused
enables real-time collaborative work
Already, both public and private P2P networks are helping small and large businesses (including content companies), universities, artists and others work collaboratively and more efficiently. Here are some examples:
The University of North Carolina at Chapel Hill. Robert Kirkpatrick, Distinguished Associate Professor of English and Director of the London Summer Honors Program at the University of North Carolina at Chapel Hill, used Groove Network's P2P tools to manage a class in the composition of poetry. Among other things, Kirkpatrick used P2P technology to encourage collaborative editing and comment on students' work, adjust the syllabus, archive course materials, and create a list of links to resources of poetic forms and vast archives of complete works of poems and critical writing. The class also uses the Groove tools for a class forum and an announcement board to share information on musical, dramatic and other events on campus. Kirkpatrick said that P2P technology ''makes it possible to extend that most expensive form of education—one-on-one tutorial—into a cohesive class experience. . . . It comes very close to being, for me, the ideal academic tool.'' [3]
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CenterSpan. CenterSpan is a distributed content delivery network licensed to distribute copyrighted digital content from major media companies. Earlier this year, CenterSpan announced an agreement with Sony Music Entertainment whereby CenterSpan's secure P2P network provides music from Sony Music artists to a wide variety of online service providers seeking to offer their subscribers streaming and downloadable music. [4]
J!VE Media. J!VE Media is the creator of a suite of digital video packaging, digital rights management and media delivery services which enable content providers to distribute protected digital video content via publicly accessible P2P networks, including the Gnutella Network (which includes users of LimeWire and Morpheus) and the Fastrack Network (which includes users of KaZaA and Grokster). J!VE uses P2P distribution technology because it allows content owners to rely almost entirely on users to provide the most costly computing resources involved in digital distribution: data storage and bandwidth. J!VE distributes only authorized content, and its customers include: 1) the Priority Records division of the EMI Recorded Music Group; 2) Koch International, the world's third largest independent music label; and 3) The Comedy Network, Canada's 24 hour comedy cable channel. [5]
Project Gutenberg. Project Gutenberg seeks to convert to ebook form, and widely distribute over the Internet, over 4500 works from the King James Bible to Shakespeare to the CIA World Fact Book. These works are either in the public domain or authorized by copyright owners for distribution. One of the chief hurdles facing Project Gutenberg and public domain projects like it has been the expense of hosting and distributing the resulting files. Today, these expenses are being reduced, and valuable public domain works are reaching more people, because these texts are being distributed over P2P networks. [6]
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Furthur Network. The Furthur Network is a non-commercial, open source, P2P network of legal live music. Music lovers download and share music from each other. Musicians that allow the non-commercial taping and trading of their live performances are allowed on this publicly accessible P2P network. This would include bands like the Grateful Dead, the Allman Brothers Band and the Dave Matthews Band. TDK, the consumer electronics and recordable media company has recently recognized the importance of this segment of the music industry by sponsoring the third annual Jammy Awards, which honors musicians who focus their art on live music. In the words of Bruce Youmans, TDK's Vice President of Marketing, ''There are literally hundreds of sources, including directly from some of the artists performing at the Jammys, for legally acquiring today's best music without infringing on artists' copyrights.'' [7]
All indications are that P2P technology will stimulate our economy if it is allowed to flourish. As with any successful new technology, innovators will seek to capitalize by developing new applications for P2P. [8] Moreover, since every computer on a P2P network becomes, in effect, a file server for every other computer, it is likely that businesses and individuals will demand faster and more powerful PC's. Equally as important, many experts predict that increased use of P2P networks will drive up the demand for broadband. [9] It is not difficult to see why—using the increased bandwidth capabilities of a P2P network, a homeowner using only a DSL line could send files at a speed and capacity that is eight times faster than a T-1 line!
LIKE OTHER TECHNOLOGIES, P2P CAN BE ABUSED
Despite the recognition of Congressman Berman and other legislators of the enormous promise of P2P networks, [10] the focus of this hearing is on their abuses—that is, the illegal sharing of copyrighted material over these networks. Let me be clear—Public Knowledge does not condone the illegal sharing of files on any network—be it P2P or otherwise. We believe in the constitutional and historical purpose of copyright protection, that is, to encourage the creation of new artistic works for the ultimate benefit of the public. That purpose is not well served by individuals who engage in large scale illegal file trading. As discussed below, we think that the content industry has several avenues available to it to curb these abuses that will also preserve the technology and the rights and expectations of consumers and computer users.
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That being said, my fear is that the emphasis on the abuses of P2P networks may well give rise to actions that could ultimately destroy the promise of this technology. As discussed below, proposed laws like H.R. 5211 could lead to actions by copyright owners that could literally bring these and other networks to a sudden and unfortunate halt. Even where the copyright owner's motives are the most benign, actions authorized by this bill could seriously tax these valuable networks by making them less efficient, more unstable, and subject to greater private control. That is not good for consumers, the tech industry or the content industry, which believes, as I do, that it will figure out how to harness P2P technology and profit. Thus, it is not just the illegal activity that might be slowed by the kinds of self help techniques authorized by this bill, but also every legitimate current and yet-to-be-developed business dependent upon the promise of P2P technology.
P2P networks, like other technologies (e.g., cars, telephones) can be used for good, or they can be abused. But we don't outlaw these technologies or limit their legitimate use because of the possibility (and yes, even the probability) that someone will use them to do harm. Public Knowledge supports targeted mechanisms to limit abuses of these networks. But we cannot support laws or technological measures that harm legitimate uses of the technology in the effort to curtail illegitimate ones.
THE CONTENT INDUSTRY HAS TOOLS AT ITS DISPOSAL WHICH, IF USED TOGETHER, CAN LIMIT THE IMPACT OF ILLEGAL FILE TRADING OVER P2P NETWORKS.
Over the past several months, my staff and I have had a number of productive conversations with various sectors of the content industry. While we have not agreed on everything, I have appreciated their willingness to be candid and engage in a continuing dialogue. One thing the various sectors of the industry have been willing to admit is that infringement cannot be stopped completely. This is true with regards to physical infringement as well as virtual infringement.
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Thus, the critical question becomes: how can the effect of illegal file trading over the Internet be limited without eroding the legitimate consumer/computer user rights and expectations? I propose a combination of three tools:
ENFORCEMENT OF EXISTING LAWS
Both the Copyright Act and the Digital Millennium Copyright Act provide for remedies for certain unlawful uses of copyrighted material. [11] There is little evidence and indeed, the content industries do not claim, that when the law is enforced it is ineffective. In fact, when the content industries choose to enforce their rights under these laws, like in the Napster, Audiogalaxy and Madster (aka ''Aimster'') cases, they have succeeded.
Despite its claims that billions of songs have been illegally downloaded, we are not aware of a single case in which the recording industry has taken legal action against an individual downloader. The problem is that the recording industry apparently does not want to enforce the rights it claims when it comes to illegal P2P file trading because it looks bad to sue its own customers. Therefore, the industry has decided instead to shift that burden onto other corporations, and in particular, ISPs. As many of you know, the RIAA is seeking to force Verizon to hand over the names of its customers based solely on the RIAA's allegations that those customers are engaging in infringing activity. Verizon, backed by civil liberties and other public interest organizations such as my own, has argued, among other things, that forcing ISPs simply to give copyright owners the names of their customers without a judicial determination that they may be engaged in any illegal conduct would violate the constitutionally mandated privacy and anonymity rights of their customers, and put ISPs in the untenable position of having to respond to the numerous identification requests that would inevitably result.
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Were Verizon and other ISPs to comply with such requests, the RIAA would be empowered to collect sufficient information with which to conduct investigations of potential defendants and engage in surveillance over a period of days or even years, choosing to sue the defendants presenting the worst facts and having profiles least likely to garner public or judicial sympathy. As is often said, bad facts make bad law. The RIAA plan appears to have no other purpose than to find the worst facts before seeking an interpretation of its legal rights.
Verizon's refusal to succumb to the RIAA's request does not leave the industry without a remedy. It can bring a ''John Doe'' lawsuit against anonymous infringers and serve Verizon with a third-party subpoena pursuant to Fed. R. Civ. P. 45. Once the industry has satisfied a judge that its allegations of infringement have evidentiary support, Verizon (and other ISPs) will be required to make available those names. With ''robot'' technology that allows the industry to pinpoint the most egregious uploaders with some (but by all means not perfect, see discussion below) accuracy, the industry's complaint that it would have to bring numerous expensive lawsuits rings hollow. Unless the industry wants to sue every person with a handful of infringing files on its hard drive, it has the economic and technological means to locate the kind of large scale alleged infringer that it would want to bring to court.
An industry-initiated law suit against a large scale infringer could also have the benefit of serving as a deterrent to other bad actors. As we have seen in other contexts, specifically targeted lawsuits and other legal action can have a deterrent effect, and also educate the public as to what is legal. But if the industry refuses to bring targeted cases, we will only be left with unfounded complaints that the copyright law provides a ''right without a remedy.'' The remedies exist, but copyright owners must take up the challenge of invoking them.
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NON-INVASIVE SELF-HELP
Public Knowledge does not oppose the use of reasonable non-invasive self-help techniques by the content industry. By non-invasive, we mean techniques that do not entail a third party attacking a file located on a computer hard drive (or denial-of-service attacks on individual users or on providers). Examples of non-invasive self-help include spoofing, flooding, decoy, spoiler files and redirection. Many of these techniques involve the intentional distribution of phony or corrupted files that an individual seeking to make an unlawful reproduction will then download. Others will send downloaders to legitimate sites. What distinguishes these techniques is that they are activated by an individual's affirmative effort to obtain an unlicensed copy of a file.
On the other hand, Public Knowledge cannot support self-help techniques that permit the copyright owner to block access to an individual's computer hard drive for the purpose of making an allegedly illegal file unusable or incapable of being downloaded. In the most popular of these techniques, commonly known as Interdiction, a computer program repeatedly requests the same file from a particular P2P network user. As a result, no one else can get to that file, or to any other file on that user's computer even if the other files to which access is sought are perfectly legal and downloading them is perfectly lawful.
There are several problems with self-help techniques of this kind. The first, of course, is that the program, or robot, could be mistaken in its determination that a file is one that warrants protection. While we have received assurances from the RIAA that the ''bots'' that its member companies use are extraordinarily accurate, evidence submitted in its pending litigation with Verizon demonstrates otherwise. For example, UUNet, an ISP, was sent a notice by Warner Brothers, owner of the copyright to the motion picture ''Harry Potter and the Sorcerer's Stone.'' The notice asked UUNet to disable access to a user, identifying as the single infringing file a 1K file named ''harry potter book report.rtf.'' The size and type of the file make it clear that the file was nothing more than a child's school book report on a Harry Potter book. The record includes other examples of similar inaccuracies. [12]
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Moreover, it is important to remember that the members of the RIAA will not be the only copyright owners capable of using these techniques, particularly if H.R. 5211 becomes law. The fact that Interdiction not only makes unavailable the allegedly infringing file, but also makes the rest of the user's files unavailable only exacerbates this problem.
A second concern is that Interdiction and similar self-help techniques punish individuals for ''making available'' copyrighted content, regardless of whether that content was legally obtained or not. Such punishment would extend copyright protection beyond what the law currently allows. Unlike in the European Union, U.S. copyright law does not give a copyright owner a separate right to ''make available'' his work. Efforts to include such a right here have been heretofore rejected.
Finally, we are concerned with the worst case scenario—that repeated requests or similar actions could prevent a user from accessing the Internet for any other purpose, resulting in a so-called ''denial of service.'' Regardless of whether an individual has an infringing file, denial of service caused by self-help will burden ISPs and other network users, both indirectly and directly. This is particularly true where such attacks can be done secretly, such that a user's first call will be to its own ISP to complain about a malfunction. Even on a network where a loss of service for one may not directly affect other users, every denial of service claim requires ISP time and resources to figure out its cause, causing it to spend less time on other, more serious service problems, which might be caused by cyberterrorism, other security breaches or legitimate technological breakdowns. This has an indirect effect on all the other customers on an ISPs network and also burdens the entire network. Moreover, with some ISP networks (particularly the shared architecture of cable modem service), the service quality of innocent ISP customers could be directly affected if invasive self-help leads to a denial of service for another customer—in other words, innocent ISP customers are harmed by the acts of one suspected infringer.
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Legitimizing and harboring invasive self-help has startling implications. Again, whether the large content companies use techniques that are more accurate and often unrecognized by the computer user is nice, but is largely beside the point. If expressly permitted or protected, self-help of various shapes and sizes will be available to all copyright owners, some of whom may believe that it is perfectly within their rights to launch denial of service attacks. Some of these attacks may affect actual infringers, while some almost certainly will affect innocent parties, who will have no idea why they (or others) cannot access their files or why their Internet service is not working. These attacks will likely provoke retaliatory attacks by some users, and the acquisition of defensive software by others. Soon, the Internet will look like the Wild West, with self help bots and bot blockers replacing guns as the weapon of choice.
The collective impact of all these self help efforts, particularly if they are sanctioned by law, might be to reduce or eliminate the effectiveness of the Internet as a communications medium in a number of ways, from consuming bandwidth to forcing ISPs into imposing crippling terms-of-service agreements. The final victim of this Internet free-for-all, of course, would be rollout of broadband, for which P2P is the ''killer app.''
PROMOTING COMPETITION TO BUILD A NEW BUSINESS MODEL
Last June, at the request of USA Today, I spent several hours discussing digital media issues with a number of top executives from the content and consumer electronics industries. What struck me was that the New York representatives of the content industries all agreed on one thing: that they had to create new business models that take advantage of the low cost, ubiquity and speed of the Internet. In answering the question of whether the recording industry had responded to the Internet needs of its customers, John Rose, Executive Vice President of the EMI Group stated:
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There's no question that this industry, like every other industry that went through this, didn't deal with it in as forward-thinking a manner as it could have. The real question is: here's where we are, what do we do about it? There's no way you're going to constrain the Internet, . . . The question is, can you come up with economic models to empower guys like Alan [McGlade of MusicNet, an industry-backed online music service]? [13]
These content industry executives believe, as I do, that if they can provide easy access to a wide range of high quality content at a fair price, most consumers looking for content over the Internet will choose their services. [14] In other words, they believe that they can, in fact, ''compete with free.'' [15] Rob Reid of Listen.com, an online subscription music service that licenses music from the recording industry, said as much in a recent Department of Commerce Forum:
The way I compete [with free] is I have to create a service that's better than free, which is hard to do. I mean, that's hard to do. I mean, that's a tough proposition, but the good news is people do opt for things that are better than free all the time. If they didn't, you know, we'd be eating at soup kitchens every night, and not going to restaurants. And just looking around this table, I see a bottle of Poland Springs . . . that tells us that designer water is a multi-billion dollar industry, and that comes out of the faucet for free. So better than free does exist. [16]
Despite the fact that industry efforts to bring content online have been going on for years, a successful business model has not emerged. One of the reasons this is so is that creating such a model is not a simple task—it takes time, resources and sometimes plain dumb luck. [17] But I believe that there are two other reasons a business solution has been slow in coming: 1) the same industry minds have been attacking the same problem for all that time, and 2) the industry has refused to permit others to try and figure out how best to deliver content over the Internet.
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If the content industries are sincere in their desire to create new business models (and I believe that they are), then they should give others the opportunity to help them to do so. Not for free—for example, the recording companies could license their music to various online retailers and ask the licensee for the same statutory rate that the publisher gets ($0.08) for each song the licensee sold online. Retailers who choose to offer them to the public must all pay the same ''wholesale'' price but can then compete vigorously with each other to find the business proposition most appealing to consumers. This is a win-win situation. The copyright owner gets paid, and a competition ensues to build an online music service that provides a high quality, large catalogue at a reasonable price. In fact, several successful business models could emerge that are entirely different than anything being contemplated today and appeal to different types of consumers, just as retail stores do for pre-packaged goods. There will be failures, no doubt—but until innovators and entrepreneurs are given a chance to fail, the chances that success will be achieved are greatly diminished, and the public benefit from broad and competitive dissemination will surely be lost. [18]
H.R. 5211 IS A WELL-INTENTIONED BUT FLAWED BILL
Public Knowledge appreciates the good intentions of Reps. Berman, Coble, Smith and Wexler in sponsoring H.R. 5211. We believe that they are sincere in their desire to encourage P2P technology and to stem the flow of illegal file sharing.
Unfortunately, these good intentions cannot save this flawed bill. Part of the problem is that because P2P technology underlies the entire Internet, it is difficult to draft legislation that addresses specific P2P networks such as Morpheus and KaZaA without also including the entire Internet and World Wide Web in its scope. Also, as discussed above, it is difficult to imagine certain ''self-help'' techniques that could interfere with specific P2P networks that would not also put the efficient functioning of the larger Internet at risk, impose enormous new tech support burdens on ISPs and impair customer satisfaction with broadband. Finally, as discussed above, while we may accept that some of the techniques now in use by the content industries are somewhat benign, this bill allows for self-help by all copyright owners—some of whom may not have the same concerns about upsetting their customers as do large content companies.
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Among the provisions in this bill that are the most troublesome from a consumer perspective are:
The bill gives copyright owners extraordinary powers to engage in self-help. H.R. 5211 grants copyright owners and their agents the right to break any law, state or federal, civil or criminal, in furtherance of ''disabling, interfering with, blocking, diverting or otherwise impairing'' the availability of his or her copyrighted works on a public P2P network. This extraordinary power is limited by five vague conditions: 1) the copyright owner may not ''alter, delete, or otherwise impair the integrity of any computer file or data residing on the computer of a file trader'' (Subsection (a)); 2) the owner must not impair the availability of files on a targeted computer other than the works the copyright owner owners except as ''reasonably necessary'' (Subsection (b)(1)(a)); 3) the copyright owner may not cause ''economic loss'' to any person other than the targeted file trader (Subsection (b)(1)(B)); 4) the copyright owner may not cause ''economic loss of more than $50'' to the targeted file trader (Subsection (b)(1)(C)); and 5) the copyright owner must notify the Attorney General seven days before engaging in self-help (Subsection (c)).
These conditions leave the door wide open for abuse by the copyright owner and harm to computer users. For example, the limitations on altering and deleting files in subsection (a) conceivably would not prevent a copyright owner from cutting a user's DSL line or even his phone line, or knocking his satellite dish off his roof. The ''as reasonably necessary'' language of subsection (b)(1)(a) is undefined and invites a raft of excuses for why an individual's non-infringing files were impaired by self-help. The subsections prohibiting ''economic loss'' do not cover any non-economic loss that a target file trader or innocent victim may incur. And Subsection (c)'s notice provision is toothless: there is nothing in the bill that gives the Attorney General guidelines by which to judge self-help techniques or the power to reject them. All that is required by that subsection is notice.
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The bill shifts the burden of using self-help mechanisms onto the consumer. Currently, the content industries are very careful about the type of self-help techniques they use. This is not only for public relations reasons—the misguided use of these techniques that harms an innocent party could also result in serious legal liability for a copyright owner. By providing a safe harbor for a whole range of non-invasive and invasive self-help techniques, H.R. 5211 removes the incentives and sanctions that currently impel content owners and others to be careful in their self-help. While the damage limitation for bringing a legal action for misguided self-help is only $250, copyright owners know that most victims will never sue because it is not worthwhile to do so; the damage rarely will be large enough to justify the time and cost of litigation. [19]
Equally as troubling is the fact that the bill creates no obligation for the copyright owner to notify a victim that her Internet access has been impaired. If they are subject to misguided self help, the vast majority of computer users will have no idea why their computer has broken down or why they can no longer access certain files. Without a notice requirement, even a tech-savvy victim who figures out what has occurred and decides to bring a lawsuit will not likely know whom to sue. Only if the victim can figure out exactly who impaired her system (among millions of copyright owners) can she then ask for the reasons for that action. Subsection (c)(2)(A).
The bill erects enormous procedural obstacles for a victim of self-help to overcome before she can seek the remedies provided. H.R. 5211 creates a new cause of action for an affected file trader when a copyright owner ''knowingly and intentionally impairs . . . [a] particular computer file . . . and has no reasonable basis to believe that such [file] constitutes an infringement of copyright,'' and also causes over $250 dollars in damages to the file trader. But where H.R. 5211 giveth, it also taketh away. Even though the copyright owner is engaging in egregious and willful activity, the bill erects procedural hurdles to innocent citizens seeking to obtain restitution for wrongful self-help. The innocent file trader cannot get to the courtroom without first getting permission from the Attorney General (Subsection (d)). Whether the victim will ever get to court is left to the sole discretion of the Attorney General, who has four months to make that determination. This creates a supreme irony: the bill erects huge legal barriers for citizens seeking remedies for misguided self-help, while it dismantles them for content companies seeking remedies for infringement. This is not only anti-consumer, it is also likely unconstitutional. It delegates to the Executive Branch the discretion to block civil litigants from access to federal courts, and delegates to private parties the power to do what no government can; namely, to surreptitiously impose a prior restraint upon communications that are presumptively protected by the First Amendment without any judicial determination that the speech being suppressed is unlawful.
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The bill expands protection for copyrighted works beyond that required by the Copyright Act. Subsection (a) of the bill provides a safe harbor for self-help actions that impair the ''unauthorized'' distribution, display, performance or reproduction of a copyrighted work on a publicly accessible P2P network. But not all ''unauthorized'' uses of copyrighted works are illegal under the Copyright Act. In addition, as discussed above, by permitting self-help against individuals who merely make works available (rather than just those who illegally download available works), the bill gives copyright owners an additional ''right to make available to the public.'' This right is now only recognized by European intellectual property laws, and has heretofore been rejected in the U.S.
H.R. 5211 is well intended to stem the flow of illegal file trading, but it goes way beyond what is necessary to permit the content industries to engage in the type of non-invasive self-help described above. While Public Knowledge might consider supporting a narrowly-crafted proposal that clarifies that non-invasive self help is permissible, H.R. 5211 is not that bill.
CONCLUSION
In conclusion, I want to thank Chairman Coble, Congressman Berman and the other members of the Subcommittee for holding this hearing to discuss P2P networks. As the sole representative of consumer and citizens rights at this hearing, I would respectfully ask that you keep the record open for thirty days to permit other public interest organizations to submit testimony and comments.
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Public Knowledge urges the Subcommittee to act cautiously before seeking to alter the nature of a technology that improves the already significant abilities and flexibility of computers and the Internet, benefits artists, educators and businesses, and may very well be the ''magic bullet'' that drives broadband adoption. Illegal file trading on P2P networks can be limited through a combination of rigorous enforcement of the law, non-invasive self help techniques and promotion of competition to build new business models for online music. H.R. 5211, however, goes far beyond what is necessary or reasonable to limit illegal file trading, and if passed, could lead to actions by copyright owners that could threaten the core capabilities of the Internet.
Thank you.
Notes
1. Public Knowledge is working in partnership with the Center for Democracy and Technology and Consumers Union on P2P and related digital copyright issues.
2. A recent Gartner Research Note (Technology T–16–2550, September 16, 2002) predicts that ''[b]y 2005, 10 percent of business interactions will occur via P2P-enabled technologies (0.7 probability).''
3. www.groove.net/solutions/testimonials/education/unc.html
4. Statement of Frank G. Hausmann, Chairman and CEO Centerspan Communications Corporation before the House Judiciary Committee Subcommittee on Courts, the Internet and Intellectual Property, June 5, 2002.
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5. Declaration of Sean Mayers in Support of MusicCity.Com Inc.'s and MusicCity Networks, Inc.'s Motion for Partial Summary Judgment in MGM Studios v. Grokster, www.eff.org/IP/P2P/MGM—v—Grokster/20020122—mayers—decl.html
6. Declaration of Gregory Newby in Support of MusicCity.Com Inc.'s and MusicCity Networks, Inc.'s Motion for Partial Summary Judgment in MGM Studios v. Grokster, www.eff.org/IP/P2P/MGM—v—Grokster/20020122—newby—decl.pdf.
7. www. furthurnet.com
8. One exciting P2P application that is in its nascent stages is ''P2P signing'' for the deaf and hard of hearing. Through this application, an interpreter in one location can use high-speed communications and low-cost video cameras to provide interpreting services to consumers at other locations across the country. Frank G. Bowe, Broadband and Americans with Disabilities at 2 (2002), www.newmillenniumresearch.org/broadband.html.
9. Amy Kover, Napster: The Hot Idea of the Year, Fortune Magazine, June 26, 2000. See also, Understanding Broadband Demand, A Review of Critical Issues, Office of Technology Policy, U.S. Department of Commerce at 16 (September 23, 2002), www.ta.doc.gov/reports/TechPolicy/Broadband—020921.pdf
10. Speech by the Honorable Howard L. Berman to the Computer and Communications Industry Association Regarding Solutions to Peer to Peer Piracy (June 25, 2002), www.house.gov/berman/p2p062502.html (''P2P networks represent as much of an opportunity as a threat to copyright creators. P2P represents an efficient method of information transfer, has the potential to greatly reduce the costs associated with server-based distribution systems, and can support a variety of legitimate business models.'')
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11. 17 U.S.C. §501–507; 17 U.S.C. §1201–1204; 18 U.S.C. §2318–2319A.
12. Motion for Leave to File and Brief Amicus Curiae of United States Internet Service Provider Association in Support of Respondent filed in Recording Industry Association of America v. Verizon Internet Services, Case No. 1:02MS003323 at 6–12.
13. ''Digital Technology, Reshaping Industries, lifestyles,'' USA Today, June 25, 2002 at 4E.
14. The Office of Technology Policy at the U.S. Department of Commerce apparently agrees, Understanding Broadband Demand, A Review of Critical Issues, Office of Technology Policy, U.S. Department of Commerce at 17 (September 23, 2002), www.ta.doc.gov/reports/TechPolicy/Broadband—020921.pdf (''There is considerable belief that creative, legal, for-profit sites can out-compete 'free' alternatives. Industry will need to develop technologies that can protect digital content, ensure that legal services have the resources . . . to out-compete illegal exchanges, educate consumers about the need to respect intellectual property on the Internet, cooperate across sectors and deliver content in ways and on platforms that consumers want. . . .'')
15. Bon Jovi and its record company, Vivendi Universal SA's Universal Music Group, is competing with free by giving fans who buy their CDs ''Bon Jovi Exclusives,'' including preference in buying concert tickets, the possibility of climbing on stage and other band-related perks. Jennifer Ordonez and Charles Goldsmith ''Bon Jovi Uses 'Bounce' To Battle Music Pirates,'' Wall Street Journal, September 16, 2002, online.wsj.com/article—print0,,SB103211681937801835,00.html.
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16. Statement of Rob Reid, Founder and Chairman of Listen.com, Understanding Broadband Demand: Digital Rights Management Workshop, July 17, 2002, U.S. Department of Commerce, Technology Administration www.ta.doc.gov/reports/TechPolicy/DRM–020717.htm
17. A recent New York Times article details the challenges faced by online music services (including those backed by the recording industry) in getting permission to sell certain songs over the Internet. Amy Harmon, ''Copyright Hurdles Confront Selling of Music on the Internet,'' NY Times, September 23, 2002 at C1.
18. This week's announcement by the Warner Music Group that it would begin selling digital singles starting at 99 cents through retailers like Bestbuy.com and MTV.com is a good start. Amy Harmon, ''Warner to Sell Digital Signals Online,'' NY Times, September 24, 2002 at C9.
19. This is exacerbated by the fact that under the bill, a victim must first ask the Attorney General to decide whether her complaint is a valid one.
Mr. COBLE. Thank you, Ms. Sohn.
Mr. Galdston?
STATEMENT OF PHIL GALDSTON, SONGWRITER-PRODUCER
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Mr. GALDSTON. Mr. Chairman, Mr. Berman, Members of the Subcommittee, I appreciate this opportunity to share my thoughts on musical intellectual property and threat posed to the creators and owners of it. Just as importantly, I thank you for examining issues crucial not only to songwriters and music publishers but to music lovers around the world.
As my bio states, I am a composer, lyricist, and music publisher. I am not a recording artist. I make a living and support my family by writing songs and submitting them to performers, producers, managers, labels, and anyone else who may help me get them recorded and exposed to the public.
Over the course of my career, I have been fortunate enough to score hits on most major charts. My greatest achievement and my greatest asset is the catalog of over 600 songs I have created in 37 years of writing. I am here today because that asset—my personal property—is under attack and is the subject of outright theft by those who obtain it without my permission and without compensating me.
Please make no mistake: songwriters' livelihoods are seriously and negatively impacted by unauthorized downloading of our work through peer-to-peer networks.
While there is little doubt in my mind that the solution to this crisis is multifaceted, at least part of that solution requires that our elected representatives help us.
To most people, the system compensating songwriters for the use of their work is murky at best. Those who discuss it try to draw analogies between intellectual property and so-called real property. I don't believe that an appropriate analogy exists, and that tells me that what we songwriters create is rather unique.
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Real property, of course, is comprised of raw materials that are produced by someone else. You just can't say that about songs. If I don't dream it up from my heart and my head, there will be no song. The question most frequently asked of songwriters is, ''Which comes first, the words or the music?'' The answer is neither. What comes first is the inspiration, in all its wondrous variety, none of which, or their final expression, can be defined as ''real property.'' Nonetheless, as you well know, it is property.
To understand how songwriters are affected by unauthorized downloads, it's crucial to realize that except in rather rare circumstances, we do not sell our songs. We license them to record companies and other outlets in return for royalties when and if they sell.
And to keep things simple, I'm going to keep my remarks to sales from mechanism royalties. But the principles apply to both mechanical and performance royalties.
It's not just semantically incorrect to say that people download ''record companies' songs''; it is factually incorrect. The record companies don't own the songs. They only own their recordings of those songs. Songwriters, individual creators, own their songs. All the angry talk about the major record labels and their failings unfairly lumps the songwriter in with the labels and ignores this essential fact.
A person who downloads a record of a song of mine without my permission may think that they're punishing what they believe are big, bad record companies or greedy, selfish artists, but they're also punishing me, the person in the creative process who can least afford to be punished, because, if anything, the current licensing system for mechanical royalties already punishes me.
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When a license is sold to a record company, I receive nothing. My compensation in that situation depends entirely on the success of the recording. If I am compensated, the already low rate is set by statute. And frequently, labels demand that songwriters accept a three-quarter rate, $.06 per copy sold instead of the current statutory rate of $.08. This is another situation I hope Congress will look into.
While I am sometimes paid less that statutory rate, I am never paid more. In fact, songwriters are the only people I know who are subject to a maximum wage. Although the law guarantees me due compensation for every reproduction of my songs, including digital downloads, I don't receive anything for any of the unauthorized downloads made through P2P networks.
If there are over 3 billion unauthorized downloads per month—well, Mr. Berman has done the math for us—you can see what songwriters are losing. Therefore, while songwriters can see the value of the Internet as a new and potentially vast source of revenue and exposure, while we want music Internet services, including P2Ps to succeed, we must protect our right to be compensated.
It's sad that we songwriters are being punished for our success. The fact that it is difficult to go anywhere in the ''civilized world'' without constantly hearing songs written by American songwriters is tribute to the immense popularity of our work. Unfortunately, this popularity seems to have led to the misguided notion that because music is in the air, it should or must be free. On the contrary, music is only in the air because my colleagues and I, through inspiration and hard work, have put it there.
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All of this is about the basic principles of private property, principles that I have to believe most of those promoting or excusing unauthorized downloads would defend in any other situation. But I am due compensation for the use of my people, and because I'm not receiving it, no one should download my work without my permission.
So what can Congress do to help copyright owners cope with the damage and the continued threat from our authorized downloads? I think the answer is simple and sensible: Help us help ourselves.
The Berman-Coble bill, as I read it, would provide us with the ability to fight these unauthorized downloads by granting us limited, carefully circumscribed protection from potential liability for engaging in such self-defense. I think this piece of legislation is a good first step and part of the solution.
I believe that you can help us. I hope you are willing to do so. This is about much more than just compensation or permission. This is about the health of music, for who will be drawn to a life creating music if making music cannot provide a livelihood?
This also is about respecting each other's property. My wife and I have taught our children that is wrong to steal, and yet we, all of us, are turning a blind eye to the theft of songs from the people who own them.
Finally, music along with our other powerful cultural expressions is one of this country's leading exports and greatest ambassadors. If we turn our back on those who create it, what will we be saying to our composers and lyricists? To our children? And what will we be saying to the rest of the world?
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Thank you.
[The prepared statement of Mr. Galdston follows:]
PREPARED STATEMENT OF PHIL GALDSTON
INTRODUCTION AND BRIEF BIOGRAPHICAL INFORMATION
Mr. Chairman: My name is Phil Galdston, and I am grateful for this opportunity to share some of my thoughts on musical intellectual property and the threat posed to the creators and owners of it. Just as importantly, I thank you for your willingness to examine issues crucial not only to songwriters and music publishers, but to music lovers across the nation and around the world.
As the biographical information I have provided will attest, I am a composer, lyricist, and music publisher. I am not a recording artist (although once upon a time I was one). I am what is known as a pure songwriter—one who makes a living and supports his family by writing songs and submitting them to recording artists, producers, managers, labels, and anyone else who may help me to get them recorded and eventually exposed to the public. For the record, although I do not speak on their behalf, you also should know that I am a long-time writer and publisher member of ASCAP (the American Society of Composers, Authors and Publishers) and a National Trustee and President of the New York Chapter of the National Academy of Recording Arts and Sciences, the group that bestows the GRAMMYAF Awards.
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Over the course of my career, I have been fortunate enough to score some major hits, and I'm fairly rare in that I have had songs appear on most of the major charts. Among my best known songs are: ''Save the Best For Last'' and ''The Sweetest Days,'' which are among seven of my compositions recorded by Vanessa Williams; ''Fly'' and ''The Last To Know,'' which are among five recorded by Celine Dion; ''One Voice,'' which was recorded by Brandy, and was UNICEF's theme song in its 50th anniversary year; ''World Without Love,'' which was a top ten record for the late country star, Eddie Rabbitt; and ''It's Not Over (Til It's Over),'' which was a top ten pop and rock hit for the rock band, Starship. My songs have appeared on more than 60 million records around the world, and I have been honored with a number of prestigious awards, including a Grammy nomination for Song of the Year and ASCAP's Song of the Year award.
The hits and the awards aside, I am a songwriter and a small-business owner. My greatest achievement, and my greatest asset, is the catalogue of over 600 songs I have amassed in 37 years of writing. I am here today because that asset—my personal property—is under attack and is the subject of outright theft by those who obtain it without my permission and without compensating me. While sharing my thoughts on that subject, I hope I can shed some light on a few additional, and significantly related ideas, including the basic understanding of music rights as our society defines them and the abundant confusion among the different rights of record labels, recording artists, and songwriters. But please make no mistake about the situation songwriters face: our livelihood is seriously and negatively impacted by unauthorized downloading of our work through peer-to-peer networks.
REAL PROPERTY VS. INTELLECTUAL PROPERTY
It would be nice to say that the business community in which we operate has developed a solution to this problem. But that is not the case, and, what's more, it may be extremely difficult to achieve in the short run. While there is little doubt in my mind that the solution to the crisis brought on by unauthorized downloading will be multi-faceted and will require a combination of effective digital rights management technologies, better online access to digital copyrighted material, better enforcement of copyright laws, and new technologies to aid in enforcement, at least part of the solution requires that our elected representatives help protect us.
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To most people, the system compensating songwriters for the use of their copyrighted work is murky at best. (The good news, I believe, is that it's no more complicated than the oil depletion allowance or farm supports.) I've noticed that most people who write or speak about music and the rights of those who create it try to draw an analogy between intellectual property and so-called ''real property.'' You know, ''downloading a song without the copyright owner's permission is like stealing a bicycle,'' and the like. After many attempts on my own and with colleagues, I've concluded that an appropriate analogy probably does not exist. That tells me that what we create is rather unique.
Real property is comprised of raw materials that are produced by someone else. You just can't say that about songs. If I don't dream it up from my heart and my head, the song will not exist. The question most frequently asked of songwriters is ''which comes first, the words or the music?'' The answer is neither. What comes first is the inspiration, in all its wondrous variety of forms, none of which, or their final expression can be defined as ''real property.'' It is property, nonetheless.
RIGHTS TO A SONG VS. RIGHTS TO THE RECORDING OF A SONG
To understand the position in which unauthorized downloading places songwriters, it is crucial to realize that, except in rather rare circumstances, we do not sell our songs. We license them to record companies, and other outlets, in return for royalties when and if they sell or are played in broadcast media. For the purposes of this statement, I am going to focus exclusively on the sales—or mechanical—royalty part of our revenue.
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There is a given in the music community: ''It all starts with the song.'' That is not only true of a great record or live performance, it's true of the rights that flow from a song's creation. And those underlying rights are separate and distinct from the rights attached to a recording of it. It is not just semantically incorrect to say that people download ''record companies' songs.'' Strictly speaking, the record companies only own their recordings of those songs, not the songs themselves.
The significance of this is that all the angry talk about the major record companies, and their failings (you know, ''Why should I pay $18.00 for a CD with only one good song on it?'' and the like), when applied to the debate about unauthorized downloading ignores this essential fact of ownership. So, a person who downloads a record without authorization may be trying to punish what they believe are big, bad record companies and greedy, selfish artists. But they're punishing songwriters like me, the people in the creative process who can least afford to be punished.
When I license a song to a record company, I receive no fee, no advance, no payment of any kind. I will only receive compensation when, and if, the recording of my song sells. If I am compensated, the rate, which is already quite low, is set by statute. Frequently, as a condition of recording and releasing a song, labels demand that songwriters accept three-quarters of the statutory rate; in other words, six cents per copy sold instead of the current statutory rate of eight cents. (This is another situation I hope Congress will look into). Please note that, while we may be paid less, we are never paid more. And since we're limited to a maximum of eight cents by statute, we can't charge more elsewhere to make up for the loss.
WHAT SONGWRITERS ARE LOSING
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Under law, the compensation we do receive is due us from every reproduction of our songs, including digital downloads. However, we do not receive any compensation for unauthorized downloads made through P2P networks, like KaZaA, Morpheus, or Bear Share. Therefore, while songwriters can see the value of the internet as a new and potentially vast source of revenue and exposure, while we want music internet services, including peer-to-peer services, to succeed, we must demand that we be compensated for the use of our work. That is our legal right.
If, as the most recent studies suggest, there are over three billion unauthorized downloads per month on all known peer-to-peer servers—well, you can do the math and see what songwriters are losing. Moreover, every time someone downloads a song of mine without my permission, I am losing all that follows from it: the ability to support my family, the capital needed to continue to re-invest in my business, and the economic incentive to continue to create.
THE RIGHT TO GRANT OR DENY PERMISSION
In a peer-to-peer download, songwriters are losing something else: the right to grant or deny permission for that type of use. Of course, this is an essential aspect of ownership of any property. But in this case, it's a point illustrative of the complexity of the interlocking benefits of the use of songs.
For example, although a good number of artists write the songs they record, their rights as recording artists and any artists royalties they may receive from the success of their recordings are entirely separate and distinct from those they enjoy as songwriters. By extension, my rights as a songwriter and any financial gain I may derive from the success of a recording made of it are distinct and separate from those of the artists who records my songs.
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There are artists, labels, and artist-songwriters who may very well benefit from permitting audience members to download their work for free. Unlike pure songwriters, artists and labels have alternate sources of income and long-range goals to promote. Celine Dion or Brandy or Beyoncé Knowles may profit more from the sales of concert tickets or t-shirts than they lose from a free download promoting their merchandise. The artist and label may decide that it is more profitable to offer a free download in return for, say, an audience member's e-mail address. That trade provides them with an opportunity to market other products and services. Simply put, that is their choice; it should not be imposed on me. (By the way, I haven't seen a lot of ''PHIL GALDSTON, PURE SONGWRITER'' t-shirts for sale.)
SONGWRITERS ARE BEING PUNISHED FOR OUR SUCCESS
It is sad to me that, as a group, we songwriters are being punished for our success. The fact that it is difficult to go anywhere in ''the civilized world'' without constantly hearing songs—the vast majority of them written by American songwriters—is tribute to the immense popularity of our work. Be it a store, a mall, a movie theater, a living room with a TV on, a dorm room with a computer, a restaurant with a radio playing, or even the much-maligned dentist's office or elevator, the soundtrack to our lives is a stream of songs. And I imagine that, for many, this ubiquity, born of popularity, is the source of the misguided idea that, because music is in the air, it should or must be free.
On the contrary, music is only in the air because my colleagues and I, through inspiration, hard work, and perseverance, have put it there. We are due our just compensation for its use, including via download. Just as importantly, as individual creators, we are entitled to decide when and how it may be downloaded. All of this is about the basic principles of private property—principles that I have to believe most of those promoting or excusing or defending unauthorized peer-to-peer downloads would defend in any other situation.
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HOW CONGRESS CAN HELP
What can Congress do to help copyright owners coping with the damage and the continued threat from unauthorized downloads? Unless you're going to set up a ''copyright police'' to investigate and prosecute this wholesale theft, we're going to have to ask you to help us help ourselves. I wish I could see another way around this, but I can't.
The unique problem we songwriters face when our work is pirated is that, unlike the owners of real property, not only can't our property be returned to us, its return would not compensate us. It is the unauthorized use in the form of a download of our songs for which we can never be compensated. So we must find a way to stop the unauthorized downloads.
We're probably most similar to the owners of satellites and cable systems, who face no liability when they use electronic countermeasures to stop the pirating of their signals and programming. However, at this point, due to the wide range of many anti-hacking laws, our legal ability to prevent the theft of our property through peer-to-peer systems is inhibited by a high degree of liability. The Berman Bill, as I read it, would provide us with the ability to stop these unauthorized downloads by granting us limited, carefully circumscribed protection from potential liability for engaging in such self-help. In my opinion, this piece of legislation—even understanding that it may be possible to improve it—is a good first step.
I know that you can help us. I hope you are willing to do so. In the end, this is not solely about just compensation or permission; this is about the health of music. For, who will be drawn to a life creating music, if making music cannot provide a livelihood? And very importantly, this also is about respecting each other's property. We teach our children that it is wrong to steal. Such unethical or immoral behavior, we instruct them, is never acceptable. And yet, we currently turn a blind eye to the theft of songs from the people who own them.
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Finally, music, along with our other powerful cultural expressions, is one of this country's leading exports. It is also one of our greatest cultural and, some would say, political ambassadors. If we turn our back on those who create it, what will we be saying to our composers and lyricists? What will we be saying to our children? What will we be saying to the rest of the world?
Thank you.
Mr. COBLE. Thank you, Mr. Galdston.
Mr. Saaf, you're recognized for 7 minutes.
STATEMENT OF RANDY SAAF, CHIEF EXECUTIVE OFFICER, MEDIADEFENDER
Mr. SAAF. Thank you.
I'd like to start off by thanking Mr. Berman for having the foresight to bring a bill like this to the forefront.
Mr. COBLE. Mr. Saaf, if you would, pull that mike a little closer to you. Thank you.
Mr. SAAF. I want to start off by saying, I am not a lawyer, I have read the bill, and I do not claim to understand all the points of the bill or the law it's affecting.
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I'm here as a technologist.
I am the president and CEO of MediaDefender. MediaDefender is the largest developer and seller of the peer-to-peer anti-piracy software this bill is addressing.
I want to make the point of how noninvasive MediaDefender's technologies are, in my testimony. We have been selling our technology for over 2 years. Very little reaction has been seen because of how benign our technology is.
MediaDefender is not trying to quash the advancement of peer-to-peer networking. On the contrary, MediaDefender is a big fan of peer-to-peer networking. We believe it's one of the biggest advancements in the Internet since the Web page and has countless applications. However, MediaDefender is also a fan of copyright law. We don't feel these two positions are in opposition to each other.
Piracy is currently the primary use of peer-to-peer networking. We have consistently seen through our hundreds of reports that we generated that 30 days after the release of a popular piece of copyrighted material, approximately 15 percent of the network will have download that piece of copyrighted material.
With over 50 million regular users of peer-to-peer networking, that calculates to just over 7.5 million illegal downloaders per copyrighted piece of material.
The top-selling album this year, in its first months, sold just over 4 million copies. I think that gives a good scope of the magnitude of the problem.
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MediaDefender's technology provides a pleasant medium where peer-to-peer technology and copyright law can live together. There are some technology problems that can only be solved with technology. The virus industry can only be solved with the anti-virus industry's software. MediaDefender's technology is the only way to stop decentralized peer-to-peer piracy.
The classic example of a decentralized peer-to-peer network is the Gnutella network. It was created as a reaction to the Napster lawsuit as an indestructible peer-to-peer system.
Napster was centralized. There was somebody to regulate. Obviously, it got shut down for copyright infringement.
Gnutella, on the flip side, is completely decentralized. There is nobody to sue and nobody to regulate. It's a free-floating technology on the Internet.
MediaDefender's technology is the only way to regulate a network like Gnutella. MediaDefender technology only affects networks on a macro scale, meaning we don't really pay attention to the individual users much on the network.
MediaDefender's technology participates in the peer-to-peer network like any of the other 50 million peer-to-peer users. Our aim is to prevent the person seeking the pirated material from finding the pirated material. Data is not collected on individuals. Computers and files are not harmed. There is no excessive drain on bandwidth. And legitimate content is still widely available on these networks.
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Some of MediaDefender's technologies are completely lawful and have been spoken about here, such as decoying, spoofing, and they're well-understood.
However, other technologies that could be very effective in the fight against piracy happen to overlap with existing computer use and hacking laws that were never meant to address peer-to-peer networking.
Interdiction is the classic example of one of those technologies. Interdiction is where MediaDefender gets in line and downloads content from a person providing content on a peer-to-peer network.
To the end-user providing the content on the peer-to-peer space, it looks just like somebody else is downloading the content from them. People are putting these files to be available on the public Internet space via these peer-to-peer networks, and MediaDefender is just downloading it from them. If we weren't downloading it from them, somebody else would be.
There is no excessive drain on resources when we're doing this, and it doesn't affect the Internet services such as e-mail, Web browsing, or even the other use of peer-to-peer networking. It acts exactly the same as the peer-to-peer networks act.
It's purely coincidental that some current laws overlap with this particular technology. We don't want a MediaDefender noninvasive technology to be illegal due to hacking laws that were never meant to address peer-to-peer self-help technology.
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MediaDefender believes strongly in the privacy of individual users. MediaDefender has been able to stay under the radar for over 2 years because of how noninvasive our technology is.
Right now, copyright owners have three options, as I see it. One, you sue the tens of millions of individual contributory copyright infringers on the peer-to-peer networks. Two, you sue the software developers who create the systems. For a system like Gnutella, where there are thousands of different software developers, that's very impractical. Or three, you use MediaDefender's technology.
MediaDefender's technology is the only way to proactively prevent the economic harm before it occurs. Even if you sue these people, even if you win these lawsuits, the damage has been done; they can't repay the millions of dollars of economic harm they're causing. MediaDefender's technology is actually able to proactively prevent that harm.
Thank you.
[The prepared statement of Mr. Saaf follows:]
PREPARED STATEMENT OF RANDY SAAF
I want to make clear at the outset that I have read the legislation and I am not a lawyer. I do not pretend to completely understand Congressman Berman's proposed peer-to-peer (''P2P'') bill nor the current law it is affecting. I am coming here as a technologist and the primary provider of the anti-piracy technologies this bill is directed toward. MediaDefender has a suite of technologies that are clearly legal and are widely deployed for anti-piracy protection on peer-to-peer networks. MediaDefender also has a group of technologies that could be very effective in combating piracy on peer-to-peer networks but are not widely used because some customers have told us that they feel uncomfortable with current ambiguities in computer hacking laws. These computer hacking laws are beyond my means of understanding, but I know that their intention is not to prevent reasonable, non-invasive anti-piracy technology. My aim is to inform you about MediaDefender and its technology. I want the committee to see the non-invasive nature of MediaDefender's technology so that Congress accepts the peer-to-peer bill to allow reasonable self-help technologies on peer-to-peer networks, while still protecting individuals' civil liberties.
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MediaDefender has been selling its P2P anti-piracy technologies for over two years and has gone largely unnoticed. MediaDefender's ability to operate ''under the radar'' is a result of the company's dedication to providing non-invasive technological solutions to the ever growing piracy problem on P2P networks. For the most part, there has been very little opposition to the deployment of our technologies. We have seen very little complaining, and we attribute that to the non-invasiveness of our technology. We all know that there would be a huge outcry if damage was being done to peoples' computers and clearly that is not the case. People might not ever even know this was going on if MediaDefender never came forward. However, MediaDefender feels it is important to come out and speak on this legislation because of how it could dramatically help solve the piracy dilemma on the public Internet.
Most people agree that advances in technology are beneficial to society as a whole. MediaDefender is not trying to quash the progress in computer science that has been gained through the widespread adoption of P2P networking. MediaDefender's stance is that P2P networking is a huge evolution in the Internet and will have countless applications and advantages. MediaDefender is also a fan of copyright law. We do not feel these two stances are in opposition to each other. It is true that the primary use of P2P networking today is piracy. However, there are many companies trying to advance the technology toward more noble goals.
MediaDefender's technology provides a pleasant medium where copyright law and P2P technology can live together. Technology is fostered by technical solutions to P2P anti-piracy. MediaDefender and creators of P2P software are constantly pushing each other to advance our technologies. MediaDefender views this game of cat and mouse as a net gain for all parties because, at the end of the day, we are all left with stronger, more sophisticated technology than when we started. The most analogous situation is the virus/anti-virus industry. When people advance virus technology, companies like Symantec have to develop new technology to solve the new problems. Similarly, when P2P piracy advances occur, MediaDefender has to develop new technology to solve the new problems. Thus, P2P technology is allowed to advance toward the bettering of its legitimate uses, and copyright owners can feel that they are not being driven out of business.
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MediaDefender's technologies only affect the networks on a macro-scale and not on a micro-scale. MediaDefender only communicates with the P2P networks on a high level and pays no attention to the individual users. We do not identify, nor target individuals. We do not collect information about individuals. All we see or care about are the numbers. The primary aim of the technology is to prevent the person who is seeking pirated material from finding pirated material. People's computers are not harmed and files are never altered or deleted. There is no excessive drain on bandwidth resources. Legitimate content is still widely available on the networks because its availability is not affected by the technology. Even piracy advocates have no basis for complaint because a wide assortment of pirated material is still available on the P2P networks. Our technology does not affect the scalability or overall integrity of the P2P networks. As stated earlier, MediaDefender has been selling its technology for two years and that clearly has not hindered the growth of P2P networking. There are nearly twice as many users today as there were in Napster's more popular days. The most popular P2P application receives over 2.5 million downloads a week. I would say that our technology has done very little to discourage the use and adoption of P2P networking as a whole. However, the very specific use of the P2P networks for piracy of our clients' copyrighted materials has been sharply affected. The good news is that P2P networking as a technology can live and thrive even in the presence of piracy control. At the end of the day, this is how it has to be. P2P networking is not going anywhere, and copyright law is not going anywhere. So, they have to learn how to coexist without destroying each other.
The most threatening aspect of P2P networking to the copyright holders is the growing trend of decentralization. All of the most popular P2P networking technologies in the world are either completely or partially decentralized. Decentralization means that there is no central entity to sue or regulate using the law. Even if all the courts agreed to shut a decentralized network down, it could not be done because it is simply a free floating technology protocol on the Internet, similar to FTP or HTTP. The original completely decentralized P2P protocol, Gnutella, continues to be the leader in the decentralized P2P world. Thousands of computer scientists have developed hundreds of programs to hook into this ethereal network that floats on the Internet. Any programmer can very simply code a software client to hook into the network. Nobody owns Gnutella and nobody regulates it. However, the clear and primary use of the network is for the downloading of copyrighted material. This intuitive conclusion has been verified by MediaDefender's years of research. Gnutella was born out of a backlash in the online world toward the Napster lawsuit, and it was created to be an unstoppable P2P technology. Any person can see the breadth of pirated material on Gnutella by putting a generic search string, such as a period (''.''), into any Gnutella client. When I typed a period (''.'') and hit search on a Gnutella client this morning, I received over 1000 returns with content ranging from Eminem to Harry Potter. I advise anyone to perform this simple experiment if they still need to convince themselves P2P networks are primarily used for piracy. Copyright law never anticipated a completely decentralized P2P network on the Internet and cannot prevent the piracy. Sometimes you have to use technology to regulate technology because there is no other practical means. Decentralized P2P networking is a case where there is no other solution beyond MediaDefender's anti-piracy technology. MediaDefender feels that it is important that the current laws do not stand in the way of non-invasive anti-piracy technology on the Internet. The concern is always that hacking and computer use laws not intended to address P2P anti-piracy technologies will be misapplied.
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Most current computer law focuses on hacking and does not take into account its implication on P2P anti-piracy technology. The concept of a P2P system like Napster is relatively young and was not around when many computer laws were drafted. Nobody could have anticipated that they would have an impact on legitimate anti-piracy companies. MediaDefender sells a variety of clearly lawful technologies such as Decoying. For the most part this technology is widely understood and accepted. Decoying is accomplished by passively acting as a member of the P2P network on the Internet public space and allowing thousands of files to be downloaded from our computers. The primary purpose of Decoying is to create a needle in a haystack situation which makes the pirated content difficult to find. All P2P networks have two basic functionalities: search and file transfer. Decoying only affects the search functionality of a P2P network and does nothing to the file transfer side. The pirated material is still there on the network, but it is harder to find. Decoying is the most clear and intuitive of MediaDefender's technologies. MediaDefender has several other technologies that, like Decoying, are clearly legal but we cannot go into great public detail on them at this time because there are people whose sole purpose is to overcome our anti-piracy technologies. MediaDefender has another group of equally benign technologies that could be more effective in preventing piracy, but they fall into grey areas of the current computer laws. Therefore, customers will not purchase these technologies. It is not the case that these technologies are particularly invasive, but rather, they just coincidentally fall into grey areas of very complicated hacking laws. We don't want MediaDefender's self help technology to be illegal due to hacking laws which were never meant to address P2P anti-piracy. Obviously, our customers are not going to risk using a technology that falls into a grey area of the law despite how badly they need that technology.
One of technologies that we are told falls into the grey area of the law is Interdiction. I am not going to try to describe how Interdiction falls into the grey area of the law. I have been assured from our customers that this law is unusually complicated, and it is not trivial to try and understand it. I am not a lawyer, I am a technologist. I simply want to describe the technology and why I feel that it is a good example of a non-invasive technology that can provide societal net gain if used. Fist I want to make it clear that MediaDefender agrees that any anti-piracy solution on a P2P network has to be non-invasive. Peoples' computers and files should never be harmed under any circumstance. However, any P2P anti-piracy technology will inevitably involve communication with individuals' computers located on the P2P network. The P2P networks and their participants exist on the Internet public space. Behind the scenes of a P2P network there is a massive array of communications and data transfers. MediaDefender always participates in P2P networks via their protocols and plays by their rules. What I mean by ''plays by their rules'' is that MediaDefender does not develop technologies to stop the P2P networks outside the scope of what the P2P networks allow. P2P networks allow file uploading, and that is simply what we are doing with Decoying. P2P networks allow file downloading, and that is simply what we are doing with Interdiction.
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Interdiction only targets uploaders of pirated material. The way it targets them is to simply download the pirated file. MediaDefender's computers hook up to the person using the P2P protocol being targeted and download the pirated file at a throttled down speed. MediaDefender's computers just try to sit on the other computers' uploading connections as long as possible, using as little bandwidth as possible to prevent others from downloading the pirated content. MediaDefender's computers do not scan the other computers' ports or hook into other computers exploiting known security weaknesses. MediaDefender only communicates with the computer over the P2P protocol which the user has opened up to the public Internet. The owner of the computer feels no additional impact on their computer beyond what the P2P network already applies. It should not make a difference to the user who they are uploading a pirated file to. In fact, most people who upload files on these P2P networks are bystanders who do not even realizing they are serving pirated content. Most of the P2P networks re-share content when it is downloaded. So, when a P2P user downloads a copy of Madonna's new album, they may un-knowingly become a contributory copyright infringer, uploading that file to thousands of other users.
Interdiction works by getting in front of potential downloaders when someone is serving pirated content using a P2P network. When MediaDefender's computer's see someone making a copyrighted file available for upload, our computers simply hook into that computer and download the file. The goal is not to absorb all of that user's bandwidth but block connections to potential downloaders. If the P2P program allows ten connections and MediaDefender fills nine, we are blocking 90% of illegal uploading. The beauty of Interdiction is that it does not affect anything on that computer except the ability to upload pirated files on that particular P2P network. The computer user still has full access to e-mail, web, and other file sharing programs. Interdiction does not even affect a user's ability to download files, even pirated files, on the P2P network while their computer is being Interdicted. An Interdicted computer may still share up illegal files using other file transfer programs other than that particular P2P network being Interdicted. For example, a user may run two different P2P networks, but MediaDefender is only being paid to Interdict one. The second P2P network will not be affected even though the first is being Interdicted. Multiple computers on the same Internet connection will not be affected if one of those computers is being Interdicted. In practice most users of the P2P networks will not even realize their computers are being Interdicted. The purpose of the networks is for transferring files, and that is simply what is happening. The impact to the person's computer is not noticeably different from when the person is running a P2P program not being Interdicted. Legislation like Congressman Berman's peer-to-peer bill helps clarify that non-invasive self-help technologies, such as Interdiction, are a legitimate form of copyright protection.
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Technology like MediaDefender's leaves the copyright holder with options. Right now the options copyright holders have are sue the countless number of P2P piracy systems, go after the tens of millions of contributory copyright infringers, or use MediaDefender's technological solutions. Often times MediaDefender's technological solutions are the only way to prevent immediate irreparable economic harm when a highly anticipated piece of copyrighted material is leaked onto the Internet. Nobody really wants to sue individuals or programmers. The financial loss has already occurred by the time the lawsuit is over, and the infringer is rarely able to correct the loss to the copyright holder. With tens of millions of P2P users, most of which are in the United States, many people we know and love are downloading pirated material. While downloading pirated material is not legal, it is a much less damaging a crime than making pirated material available for upload. Unfortunately, many of these illegal uploaders are people who are not intending to serve illegal material for download, and do not have the computer savvy to change the settings on the P2P program. Interdiction prevents these people from unintended distribution of copyrighted material. The advocates of MediaDefender's technology do not want to see peoples' computers hurt or privacy invaded. Most want to see technology advance. Elegant solutions to technology problems allow technology to advance without encumbrances of bureaucracy. If legal minds believe the current draft of the legislation leaves too much room for abuse, it should be redrafted. However, the concept should not be abandoned because one thing is certain: P2P technology will continue to improve and illegal downloading of copyrighted material will only get easier.
Mr. COBLE. Thank you, Mr. Saaf.
And thanks to each of the panelists for your contribution.
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Now, we impose the 5-minute rule against ourselves as well, so I will start.
Ms. Rosen, it's my understanding that RIAA member companies are already using self-help technologies to prevent digital piracy. Now, some might say, well, if this is the case, is H.R. 5211 really necessary? What do you say to that?
Ms. ROSEN. It's a good question, Mr. Chairman. And I think, as some people have said today, spoofing is perfectly legal. Redirection, as Mr. Boucher I think defines it, or as somebody's testimony defines it, is perfectly legal.
I think the issue is, what do you do about that? What do you about the fact that for every measure you come up with, there's a countermeasure?
I think there's something that Ms. Sohn's testimony doesn't deal with, and that the press just keeps getting wrong on this bill. I'm all for additional cautions being written into the bill, you know, against whatever bad things people think exist. But the absolute fact seems to be that anybody today can go on to one of these networks who is not a copyright owner—I feel like I have to repeat this for the press—anyone today who is not a copyright owner could go on to one of these networks and do everything that Ms. Sohn and Mr. Boucher and Ms. Lofgren said they're worried copyright owners are doing and be subject to less liability than the copyright owners would be if this bill were passed, because this bill actually creates additional liabilities for the copyright owner if they make a mistake.
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So anyone could do any of that today and be subject to less liability legally than the copyright owner would be if this bill were passed. That seems to me a lot of protection.
But I'm all for anybody coming forward and putting in whatever additional protections might be necessary for whatever bogeymen people are afraid of in this area. But I think the rhetoric around this issue has just gotten way beyond the facts.
Mr. COBLE. Well, I agree, Ms. Rosen. That's why I mentioned earlier, what I said about the insertion of the fear tactics. Some of the people have very cleverly done that.
Ms. Sohn, let me ask you a question. P2P network designers, I believe, if they so desired, could design their systems to limit copyright infringement. Now, this could avoid much of the need for countermeasures and many of the efficiency and stability concerns that you've raised. Do you think they should so design it?
Ms. SOHN. Mr. Chairman, the devil's in the details. I mean, yes, copyright owners have rights. And as I said before, I strongly support enforcement of laws to ensure that their rights are enforced and they get remedies.
But the problem is, is depending on you design the network, citizens and consumers have rights as well. They have fair use rights. They have certain, you know, personal rights and personal expectations about the way to use the computer and use the technology.
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And so I guess I wouldn't be opposed to it, but I would have to see the details.
Mr. COBLE. I guess the direction from which I come, it seems that they're designed now in such a way that they can circumvent the law. And I don't mean to overly simplify this. You'd think they could design so they could comply with the law; that's my point.
Ms. SOHN. Perhaps they could. I mean, I'm, again—I think peer-to-peer networks—it's in my written testimony—have a lot of great uses.
Mr. COBLE. And I concur with that.
Ms. SOHN. Absolutely. You know, again, I'd have to see how they could design it. Could they design it to stop copyright infringement? Perhaps. Might that also impinge on citizens' rights? That's where the problem arises.
Mr. COBLE. All right, thank you.
Mr. Galdston, in your testimony, you mentioned the often-cited argument that copyright owners should embrace the free file sharing on peer-to-peer networks because it acts or serves as a promotion for music, which in turns generates CD sales.
Elaborate, if you will, how the songwriter is different from the record companies or the recording artists in response to this argument.
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Mr. GALDSTON. That's a good question, Mr. Chairman. And I think it's a frequently misunderstood concept that I tried to articulate in my oral statement. Let me go a little farther.
I've had five songs recorded by Celine Dion. I'm very grateful for that. And we are united in our success and in our partnership when my song is sung by her on a record that is released by Sony—not Universal, by the way.
But where we may depart is that Celine Dion has a larger career as a recording artist, and she has a larger business decision to make. She could easily decide that it is worth it to offer a free download of a track or tracks from one of her albums in return, let's say, for securing the e-mail address of somebody who wants to download it, so that she can offer other merchandise. And of course, anybody who is in the music business knows that merchandising is tremendously profitable and successful.
So she may say: I will offer a free download of a track from a forthcoming album, and in return, I'll try to sell a t-shirt.
The problem is, I haven't seen a lot of Phil Galdston t-shirts for sale. [Laughter.]
And that's where our interests diverge, because if she offers for download a recording of one of my songs, I don't get anything where she stands to benefit some other way.
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Mr. COBLE. I see that my red light appears. Mr. Saaf, I'll get you on the next round.
The gentleman from California.
Mr. BERMAN. Thank you, Mr. Chairman.
Is the Phil Galdston concert tour a big item?
Mr. GALDSTON. Well, if I might just say, I really appreciated Mr. Wexler's demonstration. It would have been a lot more enjoyable for me if we actually heard the song, though. [Laughter.]
Mr. GOODLATTE. Would the gentleman yield?
Mr. BERMAN. Sure.
Mr. GOODLATTE. That's why I wanted Mr. Wexler to yield to me, to get the music on. [Laughter.]
Mr. BERMAN. Yes. All right, well, I guess it's up to self-help. [Laughter.]
Ms. Sohn, in the statement you gave, you did not make this statement, although you raise the specter of it in your answer to the Chairman's question, you uttered the words ''fair use.''
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I'm curious about fair use on publicly assisted peer-to-peer file-trading systems. Mr. Boucher and Ms. Lofgren and I and others, we've had many discussions about backup copies and how wide the net is in terms of fair use. And there's a lot of interesting discussion about what fair use is.
For the life of me, you surely cannot contend that files put on publicly accessible peer-to-peer systems available to 100 million or more consumers constitutes an act of fair use. But your written statement asserts, and I think you made an oblique reference to it in your response to Mr. Chairman, that a copyrighted work publicly available on a peer-to-peer file-sharing network for downloading without authorization isn't necessarily copyright infringement.
The 9th Circuit Court in Napster—well, let me just preface this by saying, I totally disagree. I think it's clearly an activity which violates a copyright holder's exclusive right to distribution. The Copyright Office agrees. The Ninth Circuit in Napster says Napster users who upload file names to the search index for others to copy violate the plaintiff's distribution rights.
I'd be curious for you to develop how you can contest the notion that making a copyrighted work available for downloading on a public peer-to-peer network doesn't violate the exclusive right of distribution.
Ms. SOHN. Well, just to clarify, I think what I really said in my written testimony was that U.S. copyright law does not include a right to make available, and that is contained in European law but that U.S. law doesn't contain such a right. And in fact, when that has come up, it has been rejected.
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So that actually—I didn't discuss the right of distribution. I just talked about the right to make available and that there is no such specific——
Mr. BERMAN. But the reason that the words ''making available'' don't appear in U.S. law is because Congress in implementing the WIPO treaties, when we passed the legislation implementing them, specifically found that the distribution rights and other rights encompass the idea. They include the idea of making it publicly available. The courts have said that. The Copyright Office has said that.
The fact that two magic words don't appear because we called it something else doesn't mean it's not so.
Ms. SOHN. Right. But it's still not actually part of American law, U.S. law. I mean, yes—look, I'm not defending it. If you're asking me to defend uploading, I'm not going to do it right here.
But that was the only point. It was a very narrow point that I was making in that written testimony.
Mr. BERMAN. All right, well, I mean, so narrow as to—you're not making a case that there's fair use in——
Ms. SOHN. No, absolutely not.
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Mr. BERMAN [continuing]. Any of this? All right.
So now we've established—well, do you disagree with the contention Mr. Saaf made, that the primary use of peer-to-peer systems is to trade infringing materials and is, therefore, illegal activity? The primary use, not the worth of the idea, not the brilliance of the technology, not its hope for the future, not the fact that there are many legitimate purposes and positive public benefits from publicly accessible file-trading systems, but that the primary use is to upload and download copyright infringing material? Do you disagree with that, Mr. Saaf's contention?
Ms. SOHN. I guess I don't know—I have not seen enough evidence that that is the case.
Look, I completely agree with you that networks like KaZaA and Morpheus are used a great deal for massive illegal file trading. And we do not support that. But, you know, I can't—I do not know enough to say—to agree with Mr. Saaf particularly that that is the primary reason. And I've seen nothing, actually, in his testimony, other than his statement, to know that that's actually true.
And I do know, as you point out, that there are many, many, many legitimate uses of peer-to-peer technology. It probably will be the killer app to drive broadband, as Ms. Lofgren said. And, again, please don't read my statements to condone any kind of massive peer-to-peer piracy.
Mr. BERMAN. Well, we're making progress. In the next round, we'll continue to try to make more.
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Mr. COBLE. I thank the gentleman.
I thank you, Ms. Sohn.
The gentleman from Virginia.
Mr. GOODLATTE. Thank you, Mr. Chairman. This is an excellent hearing. I want to thank all of the witnesses for shedding light on this issue.
Mr. Galdston, I want to especially thank you for putting a human face on this issue. We hear over and over again, it's no big deal to download a song of Celine Dion or Britney Spears because they're mega-millionaires and it has a small impact on them. But for every one of those instances, there is likely to be somebody like you behind them that is making a much more modest living. In fact, most songwriters never write a hit, and many may write one hit. And if they do, that's a very modest living for doing that.
Ms. Rosen, I share your concern about this, too. How many employees are there in the recording industry? Do you know offhand, roughly, all the companies that your organization——
Ms. ROSEN. Well, worldwide, something like a couple hundred thousand.
Mr. GOODLATTE. And most of those people aren't making mega-millions, are they?
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Ms. ROSEN. And certainly how many employees there are is not relevant to how many people's livelihoods depend on the sale of music.
Mr. GOODLATTE. Absolutely. But most of those people are making modest livings.
Ms. ROSEN. They're independents, right.
Mr. GOODLATTE. And the success of their employment is dependent upon the success of copyright laws protecting the ability to market these products.
And so I share your concern. And I doubt that KaZaA moved to Vanuatu because it's a hub of business activity. They moved there because there are no copyright laws and so that they could act as what I think they are: the home shoplifting network. [Laughter.]
Now, getting to this bill, I see you have a proposal in legislation that would cut those who want to protect copyright loose to do certain things that they're not sure whether they can do right now under current law to protect their copyright. And I see that already the opposition is developing countermeasures.
Do you have countermeasures to their countermeasures? I mean, where are we heading with this?
And I'm going to ask Mr. Saaf in a second what effect on the Internet the deployment of all this technology has. That's one of the concerns that I have that I need some reassurance on.
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Ms. ROSEN. Well, Mr. Saaf is certainly going to be more expert than I am in talking about what potential countermeasures there are for these sorts of networks.
But on the policy side, I think it's quite clear that the networks themselves offer the dangers that people are concerned about. You know, as I said before, you can hack, you can plant viruses, you can invade someone's personal computer right now on all of these services because what you do when you sign up is essentially open up your computer to the network. And so the fear of the countermeasures are in some respects no match for the threat that exists today.
So I think we want to simply be in a position on a policy basis and on a legal basis where, as this expert who I saw submitted testimony from the University of Tulsa, one of the few actual experts in information security and file trading said essentially that technological measures are going to have to continue to keep pace with the innovations of the networks themselves. And that was John Hale, I think, from the University of Tulsa.
So we have to be in a position in the marketplace where we can take steps. And so I am all for the kinds of policy prohibitions on what you think people ought not be able to do. But I think the fears of what's possible already exist.
Mr. GOODLATTE. Let me go to Mr. Saaf then.
All of these measures and countermeasures and so on, this escalating warfare that may take place—because we can't reach somebody in Vanuatu to prosecute them as we would like to under the laws, so we're going to deploy these measures—what effect does that have on the operation of the Internet and people's ability to access the legitimate things they want to access and so on?
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Mr. SAAF. I mean, ironically, the net gain to the Internet is very positive. What makes the Internet run is software. Software is what drives everything. And when a company like KaZaA, Sharman Networks, comes up with countermeasures to our countermeasures, it becomes this cat-and-mouse game much like the virus/anti-virus industry.
At the end of the day, what everybody is left with is a stronger base of technology than they started with. This isn't the first time that we've seen countermeasures, so to speak, for our technology. This is the first time that maybe there's been a press release on it or that, you know, the press decided to hook into this particular example.
But this is inevitably what is going to happen. This inevitably a cost of business for our company. But in terms of the idea of that harming the Internet in some way, that would be completely off base.
Mr. GOODLATTE. Am I correct that if KaZaA can do that, they could also deploy measures to protect copyrighted materials as opposed to things that are in the public domain?
Mr. SAAF. Yes, absolutely. That's true.
Mr. GOODLATTE. If they were so disposed.
Mr. SAAF. Yes. I mean the idea that—any kind of software product can update itself. Obviously, KaZaA can do massive updates on millions and millions of users. You know, you can make it do anything. You can make it not work. You can make it filter stuff.
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Mr. GOODLATTE. They could do it right as well as interfere with people's efforts to protect copyright.
Mr. SAAF. Yes, absolutely.
Mr. COBLE. The gentleman's time has expired.
The other gentleman from Virginia.
Mr. BOUCHER. Thank you very much, Mr. Chairman.
I appreciate the witnesses enlightening us on this interesting set of issues today.
Ms. Rosen, let me begin by asking a couple of questions of you. I am somewhat concerned that the indiscriminate use of robots could result in some Internet users having their service disconnected even though those users are entirely innocent and have not downloaded any unlawful material but simply have entirely lawful material, whether it's in the public domain or whether it's material they've paid for, on their hard drive.
I have a demand letter here, which I think is very interesting. I'd like to describe it to you, and get your reaction to it. It is from something called the Media Force DMCA Enforcement Center. It is directed to UUNet Technologies. It identifies a particular customer of UUNet, with the Internet address. And then it makes a demand that UUNet disable that connection and terminate the Internet service for that particular user.
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It then goes on, on the next page, to identify the material which is alleged to be infringing, which apparently the robot revealed in its search of the network. And it identifies the file name as ''harry potter book report.'' Now, apparently the robot was searching for illegally download copies of one of the ''Harry Potter'' movies and what it revealed was a book report with a file size of 1 kilobyte. Obviously, this was not a downloaded movie.
But the demand was made that the Internet service be terminated for this user. There's another example where the same kind of demand letter was sent to the ISP for a user who had on his drive the ''Portrait of Mrs. Harrison'' in a jpeg format. Obviously, that was a photograph. And this was revealed in a robot-directed search for illegally downloaded George Harrison songs.
Now, these are innocent users. And yet, the demand has been made of them that their service be terminated. I'm troubled by that. I'm troubled by the indiscriminate use of robots that can create that kind of result.
Now, I don't know exactly what it is that the industry is seeking to have authorized that isn't authorized under current law, but I would have to think that robot searches, intruding as they do into computer space, has something to do with it. So what I would like to ask of you is your response to this set of examples. Are you as concerned about this as I am? And should we as Members of Congress be concerned about what we may be authorizing as an indiscriminate use of robots that could lead to this kind of result, where innocent users are disadvantaged?
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Ms. ROSEN. Well, let me say at the outset that we don't use automated notices to ISPs. We actually look at the evidence first and check it before a letter goes out, just to prevent that very thing, misnamed files. So I am certainly not going to defend it. I have no idea who the copyright owner was that made such a mistake.
I do believe, however——
Mr. BOUCHER. Well, I guess in both of these examples, it would be whoever has the copyright to the ''Harry Potter'' movies and whoever has the copyright to George Harrison songs.
Ms. ROSEN. I understand. And, you know, it's like me asking you why another Congressman believes what they believe. You have no idea. Neither do I.
So I think the issue that you raise, though, is relevant to the DMCA and not this bill. And I think in the DMCA, there are remedies for both that copyright owner and that ISP to deal with that problem.
So I understand the concern, but I think, you know, enforcement is just that. It has tools, and then it has remedies for when there are problems.
Mr. BOUCHER. Let me ask you this, what is it that you're seeking to have authorized that current law doesn't allow you to do? Ms. Sohn and several of us have acknowledged that spoofing, decoys, redirection, various self-help mechanisms that we know about and you've discussed are lawful today.
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What is not lawful today that you would like to engage in and that the Berman bill would give you the privilege of doing?
Ms. ROSEN. Well, I have to defer to Mr. Saaf on that. I think the issue for us is not so much that there is a technology plan or that we know what the situation is. I think when Mr. Berman approached this idea with us, the notion was that we ought to think differently about enforcement. We ought to think not about technical mandates on machines, or not about other restrictions on providers. We ought to think about how self-help measures can be expanded and used.
Mr. BOUCHER. Well, Ms. Rosen, let me just say, my time has expired. But I want to make one comment.
It just seems to me that in the absence of a clear delineation of the additional self-help measures beyond what the current law allows that you would seek to have authorized by this bill, that we would be better advised to wait until you come forward with a clear statement of what those measures are, and then we could evaluate each one of those and look at the potential harms that might arise from it and make a decision with that particular measure on the table.
That's really all I have. Thank you, Mr. Chairman.
Mr. COBLE. I thank the gentleman.
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The gentleman from Florida.
Mr. KELLER. Thank you, Mr. Chairman.
And, Mr. Galdston, I want to thank you for——
Mr. COBLE. If the gentleman would suspend. Mr. Galdston, I have been advised by my able staff that I have been mispronouncing your surname. I said ''Gladston,'' I think, and I apologize for that.
Mr. GALDSTON. I only wish that it was the first time that it happened to me in my life. [Laughter.]
Mr. COBLE. The gentleman from Florida.
Mr. KELLER. You reminded me that I inadvertently associated Celine Dion with Universal instead of Sony, so I will apologize. I'm going to go to my room, think about what I've done, and listen to that darn ''Titanic'' song yet another 200 times. [Laughter.]
You didn't write that one, did you?
Mr. GALDSTON. I was just going to say, could you please listen to one of mine? [Laughter.]
Mr. KELLER. Okay.
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Ms. Sohn, have you ever personally downloaded a song from Napster, KaZaA, or another similar service?
Ms. SOHN. I have from Napster, yes.
Mr. KELLER. Okay. You mentioned there's been a lack of enforcement against these illegal downloaders, so I'm trying to make that simpler for them to do, with your admission. [Laughter.]
I'm just kidding you. I'm sure yours was legal.
You encouraged the recording industry to bring lawsuits against the individual file traders, but you also say that you don't believe that making available copyrighted files for download on peer-to-peer networks is an infringement of copyright, correct?
Ms. SOHN. What I said—what I said was that U.S. law does not now include a right to make available. It does not now include that. So yes, I guess the answer is yes. But I'm not defending that practice here.
And what I was concerned about—I mean, my organization is generally concerned about the expansion of copyright laws, okay? And to the extent that that right is not currently in the law, we would be concerned that this law would expand the copyright law to include such a right.
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Mr. KELLER. Did you also say that service providers shouldn't be expected to work with copyright owners to identify infringing subscribers absent the filing of a lawsuit?
Ms. SOHN. No, I think I said exactly the opposite. What I said was that copyright owners, or at least the content industries, know with some reasonable certainty who the big file infringers are. And all they have to do to get the name of that particular person is to file a John Doe lawsuit and seek a subpoena under Federal Civil Procedure 45.
The problem is if you start just indiscriminately requesting from an ISP a bunch of names of file infringers, you have serious ramifications vis-a-vis the privacy and anonymity of ISP users.
Mr. KELLER. All right.
Ms. Rosen, she says that the recording industry—''she'' being Ms. Sohn—that the recording industry has never brought a lawsuit against individual file traders, and if there's no enforcement, and it's essentially your fault. So what's your response to that?
Ms. ROSEN. Well, I take note that the consistent response to the enforcement issue from people who claim to represent consumers or technology interests are to sue people. And you know, if that's all that's left, you know, that's an interesting scenario.
I think the point that Ms. Sohn was raising, though, was relevant to actually a dispute that's going on right now with an ISP named Verizon, just a small, little company. Actually, one company bigger than our entire industry.
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In Congress, in the DMCA, there was sort of a bargain that this Committee struck with stakeholders because ISPs wanted to have no liability for copyright infringement and they wanted to not have an affirmative obligation to monitor their networks. And obviously, copyright owners were opposed to that, and you brought us to the table and said, ''No, no, no. We're going to give them that exemption from liability, but ISPs will be required to help you find the direct infringers.'' That was essentially the original point of the DMCA, the original kind of bargain. And now we're in a position where we can't do that because of people claiming some legal technicalities.
And so all we keep being left with is massive suits against individuals, which are quite expensive and obviously quite cumbersome, when, if you were in a situation where you could identify through the subpoena process contemplated in the DMCA who the infringer was directly, you could send them a warning letter.
Mr. KELLER. Why would you spend $200,000 getting a judgment against a 18-year-old kid who can't pay it? Isn't that impractical?
Ms. ROSEN. It may be practical. Certainly, you're not going to recover the judgment. I think the point that Ms. Sohn is making is the, essentially, deterrence factor of lawsuits. But there's also the opportunity for warning through the subpoena process contemplated in the DMCA that you are actually avoiding in this scenario.
Mr. KELLER. Thank you. I'll yield back, Mr. Chairman.
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Mr. COBLE. I thank the gentleman.
I noticed earlier Mr. Berman mentioned Work for Hire. I see a familiar face in the audience who did the Lord's work, helping us negotiate those rocks and shoals and reefs.
Cary, good to see you here. This has nothing to do with P2P, but good to have you here.
Well, I hear that bell ringing. Let's recognize Ms. Lofgren for 5 minutes.
And, folks, we'll have a second round as well, if you all want to come back.
Ms. LOFGREN. Thank you, Mr. Chairman.
You know, I'd like to reflect back a little bit on where we are vis-a-vis DMCA. And I've been chatting with Members sitting on both sides of me about how much the world has changed technologically since we did that bill. And I remember the discussion, and I was very much involved in it, relative to notice and take-down. And I know that none of us were thinking beyond Web sites at the time, because peer-to-peer—maybe it was out there, but it was way out there. I mean, we were just talking about Web sites.
And certainly, as the technology has changed, it is complicated and made, in some ways, dysfunctional some of what we in good faith worked to do there back there a few years ago.
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So that's neither here no there, except it's something that we may need to revisit in the future to make sure that these things actually work in a way that we had originally intended.
Getting to perhaps unintended issues, I note in the bill itself that there is a provision that allows the deletion of files if the consumer authorizes the deletion of files. And I'm thinking about how that might happen and my—I mean, shrink-wrap—you know, there's a lot of verbiage in shrink-wrap, and I'm wondering if we could imagine a time where inadvertently anybody who buys anything has permitted file deletion because of what are really contracts of adhesion.
Do you have—I mean, have you thought through this, either Ms. Rosen or Ms. Sohn?
Ms. ROSEN. No. I think, on the broader picture, we are currently engaged in what we think are appropriate and, as Mr. Saaf said repeatedly, noninvasive technologies. I can't see foresee any scenario where it would be in our interests to try and go into somebody's computer and delete a file. I think the most anybody is looking for are the ability to do more sophisticated interdictions and spoofing and redirection.
Ms. LOFGREN. So you wouldn't object if that was just taken out, if there was no way to delete a file even with permission?
Ms. ROSEN. I don't care.
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Ms. LOFGREN. Ms. Sohn?
Ms. SOHN. Well, my concern, again, is that we may accept that the recording industry and the motion picture industry have the means to use more benign self-help. My concern is that this bill permits every copyright holder that right to use self-help.
Probably almost everyone one of us in this room is a copyright holder. And not everybody has the means to afford Mr. Saaf's services. So what you're going to get is a lot of homebrewed technology.
I mean, the way I spin KaZaA matter, the fact that they're starting with their own sort of defense, is that it just makes matters worse. It's escalating a war. I call it the Wild West. You can call it a war, whatever. But you're going to have, you know—and we're not just talking about self-help that exists now. There's going to be future self-help techniques as well, and who knows that they can do.
And this bill opens the door not only to what we know now and not only to limited expensive self-help, to what may come in the future and what may be a lot less costly for copyright owners to use.
Ms. LOFGREN. Yes, Hilary, do you have something to add?
Ms. ROSEN. I was just going to go back to my earlier point, which is, any copyright owner has more liability under this bill than a noncopyright owner for doing any nasty thing——
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Ms. LOFGREN. Actually, if I can, I don't think that's correct, because the remedy provided in the bill is one that could never be, in fact, utilized, in my judgment.
But I have very little time, and the bells are ringing.
I wonder if I could just ask, before the next round, Ms. Sohn, you caution in your testimony about denial of service attacks and other things that could essentially impair the functioning of the Net itself. Could you expound on that briefly for us?
Mr. COBLE. Ms. Sohn, if you will, do it quickly because we have to go. We have one 15-minute vote and two 5-minute votes, so if you can move along.
Ms. SOHN. Well, the bill—my problem with what the bill permits and doesn't permit is there's nothing in here that prohibits denial of service attacks. And while Mr. Saaf has guaranteed us again that his technology does not engage in denial of service attacks, we can't be guaranteed because of the breadth of this bill.
And even if a person is guilty, okay, is an infringer, and they get a denial of service attack, that is likely to affect the entire network, including innocent users on that network. That's particularly true when it's a tree-and-branch shared cable-modem service, and it's also true on any ISP network to the extent that the ISP has to divert its attention, find out what's wrong. There's no notice as to who did this or why or when. And there could be other things going on an ISP's network that it must now take its resources away and deal with the self-help mechanism denial of service.
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So it affects both indirectly and directly other innocent ISP users. And they don't necessary have to people who are on a P2P network.
Mr. COBLE. I thank the lady.
Folks, you all rest easy, and we will return imminently to resume this.
[Recess.]
Mr. COBLE. We will resume our hearing, folks. I apologize to you all. Sometimes these 15-minute votes extend beyond the time frame. We're going to have a second round, but only the gentlelady from California and I are here.
Mr. Saaf, I was going to get you during the first round. Ms. Sohn raised questions or concerns that interdiction-type technologies might prevent a user from accessing the Internet for any other purpose or that they might burden ISPs or other network users directly or indirectly. Are these concerns justified, in your opinion?
Mr. SAAF. No. Actually, the contrary is true. Interdiction is a participation in the network to download files, like anybody else would be participating in the network and downloading files. The only difference is, when our company does it, it does it a throttle-down download speed, meaning that we're actually freeing up bandwidth resources that would have otherwise gone to the peer-to-peer client. These people are putting files on the public Internet space for being downloaded, and if we weren't downloading them, I guarantee all their queues would be filled up by potential pirates downloading that material.
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Ms. Sohn, to be fair, do you want to respond to that?
Ms. SOHN. At the risk of repeating myself, you know, Mr. Saaf has the state-of-the-art, most expensive technology to do this kind of self-help that there is. And perhaps there are others like him. But my concern, again, is that this bill—and again, I do want to put the focus back on this bill. This bill would allow a lot more than Mr. Saaf's technology and technology that isn't so benign and technology that actually could bring down an ISP's network. And there's nothing in the bill either that prohibits denial of service attacks.
I might feel comfortable if the bill did actually have a prohibition or took out of the safe harbor denial of service attacks. But there's no such language in this bill.
Mr. COBLE. Ms. Rosen, I was going to ask you this during the first round, but time caught up with me. In your testimony, you mentioned and demonstrated the RIAA's efforts to educate the public about copyright infringement. Provide some additional details, if you will, about these efforts and what degree of success you've experienced.
Ms. ROSEN. Well, the first thing I'll elaborate on is that it's not just RIAA. We're doing it in conjunction with a significant number of partners in the music community: ASCAP, BMI, NARAS, the artists' unions and musicians' unions, the Nashville Songwriters Association, the Gospel Music Association.
So there are many, many organizations involved.
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We have a series of ads, and I think some educational information for everybody on the Web site, MusicUnited.org. And there will be some ad spots, which will begin this evening on different broadcast outlets.
And actually, I have a tape of that spot, a 30-second spot, if the Committee would be interested in seeing it.
Mr. COBLE. What's the duration?
Ms. ROSEN. Thirty seconds.
Mr. COBLE. Yes, that's fine.
Without objection.
[Videotape presentation.]
Ms. ROSEN. That was—in the outlets that these spots will run, they won't need—the artists won't need to be identified for the fans. But for the rest of us, Missy Elliott, DMX, Shakira, Britney Spears, Nelly, a whole host of diverse artists are involved in this campaign.
Mr. COBLE. Thank you.
Ms. ROSEN. Thank you.
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Mr. COBLE. Mr. Berman, Ms. Lofgren has a 12 meeting. Are you equally pressed for time?
Mr. BERMAN. I'm chairing a 12 meeting. [Laughter.]
Ms. LOFGREN. I'm hosting.
Mr. COBLE. Zoe, if you will, move along and we'll get to Howard.
Ms. LOFGREN. I'll just be very quick, and I appreciate Mr. Berman's willingness to let just make a couple of comments.
I would like unanimous consent to submit for the record a statement made at the Aspen Summit symposium on digital rights this August by the CEO of Roxio.
[The information referred to follows:]
PREPARED STATEMENT OF CHRIS GOROG
The record companies and movie studios have come to Washington saying, ''the illegal shared file services are destroying our business.'' ''We can't compete with free downloads.''
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An often-overlooked fact in this debate is—they haven't even tried.
An illegal service like Morpheus is indeed the ''celestial jukebox''. One can access virtually any song in the world, download it and burn it to CD. A very attractive proposition. MusicNet, on the other hand, the service owned by Warner Bros and BMG, doesn't even offer their own complete catalogs... and what they do offer must stay on your PC. I haven't been to too many parties where everybody gathers around the computer to listen to tunes.
The five major record labels are each involved in legal music download services. These companies are part of the largest communications conglomerates in the world and yet, have you seen a single advertisement for the services they own; MusicNet or Pressplay? They could be promoting their services with their movies and television shows, at their retail outlets and theme parks, but instead—nothing. A cynic might conclude that they have absolutely no intention of making these on-line ventures successful.
Why should the Federal Government take seriously the complaints of an industry that has almost limitless capabilities and influences on the consumer—that has done virtually nothing to compete in the on-line world.
Michael Eisner recently went to Capital Hill and had a high profile complaint session, ''the movie business will be destroyed, etc., etc.'' Where is Disney's on line movie service? That's right. They don't have one. It's easy to be destroyed if you don't even show up for battle.
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The incredible irony in all of this is that every major third party study that I have read recently points to on line distribution as the savior of the entertainment industry. Imaging turning your back on an opportunity to rip billions of dollars out of your cost structures and deliver to consumers exactly what they want, instantly, when they want it.
Instead the entertainment companies have burdened lawmakers with poorly thought out schemes like the Digital Millenium Copyright Act which tramples on the consumer's fair use rights and now the Hollings Bill that asks technology companies to become digital policemen.
So what should Government do? I have two suggestions:
1. Tell the record companies and movie studios to come back to Washington after they have actually tried to compete. They were just as fearful of television, home video and DVD and those technologies only dramatically added to their businesses. Virtually every industry analyst believes on line distribution will be the same. The entertainment companies must listen to what their consumer is asking for; a fun, easy to use, fairly priced on line service where they can access anything, and burn it to CD and DVD. The entertainment companies and their artists need to stop fighting amongst themselves and—get it done.
2. The Government should do whatever it can to help destroy the illegal shared file services. I am convinced the entertainment companies can successfully compete against the illegal services with their vast resources, quality downloads and creative marketing, but, theft of intellectual property cannot be tolerated. It is ''IP Terrorism'' and extreme measures should be taken to eliminate piracy as much as possible.
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Ms. LOFGREN. I think one of the issues that we need to ask about at this hearing, and really after this hearing, because we floated some issues here today, but I think we all know this is a subject that is going to be discussed for some time into the future, and it's an important subject. And I think to that extent, this hearing has served a purpose.
But I think the lack of competition, it doesn't excuse illegal behavior. I don't argue that. But it doesn't confront it and defeat it either. And that is one of the concerns that I have.
It is true that illegal services, as Chris Gorog pointed out, are kind of like the celestial jukebox. But the competing, lawful music—digital music distribution efforts haven't even been advertised. And we've seen an advertisement against piracy, which is fine. I've never seen an advertisement on TV about Pressplay or MusicNet, and I sort of wonder why isn't the lawful alternatives being marketed? And why isn't it user-friendly?
Chris was mentioning the inability to move—burn CDs and move it around on some of these services, and points out that he has not been to too many parties where everybody gathers around the computer to listen to tunes.
I mean, what we need to do is examine the technology efforts that are possible, and there are many; to also encourage—and the Government obviously mandate companies being successful in their endeavor—but to ask for a dialogue about how you intend to be successful in this digital environment, because I really think the incredible irony is that most of the major third party studies that have looked at online distribution see it as the savior of the entertainment business. It is an ability to transmit information while ripping billions of dollars of cost out of the structures that currently exist for entertainment and other—it's not just entertainment. It's other types of content.
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And I really think that we, hopefully, as the months go by, we will have an opportunity to engage in dialogue about what content providers, whether it be records, movies, books, or whatever, are going to do to market successfully the digital distribution of their material.
And with that, I would yield back my time to the Chairman and to the Ranking Member, with thanks and apologies for having to leave.
Mr. COBLE. I thank the gentlelady. And we are on a tight time frame. I think Mr. Berman has to Chair a hearing at 12 as well.
Mr. Wexler, with your permission, I'll recognize Howard first.
Mr. Berman?
Mr. BERMAN. Thank you very much, Mr. Chairman. And I do apologize. I have to leave before the end of this hearing. But Mr. French and your staff and other Members will be here.
Listening to Ms. Lofgren's suggestion, I was wondering if you could perhaps promote some of these online music services with ads on Gnutella and Morpheus and KaZaA. [Laughter.]
Targeted advertising.
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But by and large, I tend to think free is even better than cheap for lots of people. [Laughter.]
Ms. Sohn, I gather, from the combination of your testimony, your written testimony, you answers to me, and your answers to, I think it was Mr. Goodlatte, that you think the distribution of copyrighted works on these peer-to-peer systems is wrong but not necessarily illegal because of the making-available issue that you spoke to. And I'm wondering, then, would you support an effort to change the law to make it quite clear that it's illegal, given your premises.
Ms. SOHN. As I said before, I'm not generally in favor of expansion of the copyright law. On the other hand, I guess what I would favor is an educational campaign to let people know that they can in fact segregate copyrighted works on peer-to-peer networks.
One of the assumptions I think that I'm a little bit troubled about that I'm hearing at this hearing is that every unauthorized file sharing, unauthorized trade of copyright works, is necessarily illegal.
Mr. BERMAN. I don't think anybody here has said that. They have said unauthorized trading on publicly accessible peer-to-peer file systems, which are available—you don't trade to a specific person on a peer-to-peer system. You put it up, and 100 million people can have it. They've said that unauthorized trading is illegal and wrong. Do you disagree with that?
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Ms. SOHN. Well, let me see if I understood what you said. I do disagree that every unauthorized trade is illegal.
Mr. BERMAN. On peer-to-peer—putting something up for trading, uploading or downloading, on these publicly accessible systems, you don't think that that's illegal?
Ms. SOHN. Again, there's a fair use right, okay? What if there's a clip? Okay, what if——
Mr. BERMAN. What is e-mail? There are a thousand different ways to distribute electronically music within an appropriate fair use right without getting into a big debate about how narrow it is or how wide it is.
I don't know how we get common ground if we can't start with the fundamental assumption that this is something so dramatically different than anything encompassed within fair use notions that we have to focus—if we can't accept that premise, there aren't many more places to go together.
Ms. SOHN. Well, I don't disagree with your premise.
I think what I'm arguing is—and maybe I should just sort of get off the legal, okay—is a very, very narrow point, and that is that not every unauthorized use of a copyrighted work is illegal. There are—maybe——
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Mr. BERMAN. We know. This is not a novel point. There is a doctrine of fair use, and it applies, and it's a defense to an infringement case.
Let me move on. Before my time is up, I want to just deal with this. It's illustrative of what we were trying to do with this bill versus what people are saying about the bill, this ''Harry Potter'' book report.
The bill only provides a safe harbor for technological self-help measures within many constraints done by the copyright owner for his own works, not for any other copyright owner, for his own works.
Just taking the hypothetical that two people have mentioned, or perhaps it's not a hypothetical, perhaps it really happened.
If someone authorized by AOL Time Warner went out to hit the ''Harry Potter'' book report, I don't believe AOL Time Warner owns the copyright to the ''Harry Potter'' book report. This would not be within the safe harbor. This bill has no impact whatsoever on that. You have to only do acts within the safe harbor before we can start saying that it allows certain kinds of acts.
So when people raise hypotheticals that have nothing to do with this bill as an attack on this bill, it seems to me that we need to straighten that logic out.
Also, denial of service. The reason people are concerned about denials of service is because they cause damage. If a self-help measure causes damage other than the blocking of an unauthorized file, it's automatically outside the safe harbor and is, therefore, not protected.
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So any self-help measures which aren't within the safe harbor are not immunized. And as Ms. Rosen has said, I think now three times, there are remedies now against inappropriate self-help measures that go beyond the law. Those remedies are all available, plus the additional remedy provided for in this bill for conduct that isn't protected by the safe harbor.
I mean, this was not a bill that the record industry or the motion picture industry or some coalition came to me and said, ''Would you introduce this bill for us?'' This was our effort, hearing different theories—mandating technology, arguments, criminal prosecution—we said, this has a role to play, too. And the staff came up—I'd like to say I thought of it driving to work, but the staff came up with this notion. And we tried to do it in a very balanced basis and to make sure we're only immunizing conduct which is directed at trying to deal with a very serious problem, a problem that many of the critics either never acknowledge or pass over so quickly that it makes me think that they don't really think it's a problem.
And with that, Mr. Chairman, I thank you for your indulgence again. And I'll go off to my meeting. And my guess is, under whoever's leadership, at whatever point, there'll be additional hearings on this issue.
Mr. COBLE. I'm confident this will be revisited.
Thank you, Mr. Berman.
Now, Mr. Issa and Mr. Wexler still have not appeared on the first round, so let me recognize the gentleman from California, and then I'll get to Mr. Wexler next. And then if we have questions for a second round, we'll do that.
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Mr. Issa, 5 minutes.
Mr. ISSA. Thank you, Mr. Chairman.
And before I begin questioning, I'd guess I'd like to make an observation, and the observation is it's a sword that cuts two ways. I think up until now our panels have been mostly content providers, mostly people who want to protect their intellectual property, and by definition, mostly support that. I think we have a 3-to-1 appearance here.
And I look forward to seeing people from, if you will, other areas, such as the consumer electronics manufacturers, the software operating system people, and so on, in a panel either later this year or next year, because I think we have to hear from as many sides as possible if we're going to come up with the right guidance for the industry.
However, Ms. Sohn, I'm a little concerned that if you're complaining about this bill with seemingly absolutely no answers that would allow us to deal with a broadly recognized problem, if that continues to be a pattern by those who object to self-help and other remedies, then I'm afraid what's going to end up happening is we're going to say there's a problem, there's only a solution from one side, and this body undoubtedly, hearing only one side, will adopt that side.
And I want to be fair to you, to say—maybe I've missed it. Maybe you have some positive solutions other than an expensive educational campaign, when so far, from what I can tell, my child and the millions of other children around the country, you can educate them, but if you give them the name of the site, they'll go there faster to get more. I don't believe that educating those who have grown up in a society that thinks that Napster was okay are necessarily going to be effected by us telling them it's wrong.
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But, please, I look forward to your comments on that.
Ms. SOHN. Well, I respectfully disagree with you.
Mr. ISSA. I was hoping you would.
Ms. SOHN. I've given four what I think are very construction solutions, which I believe when used together will limit peer-to-peer piracy.
Now, I would venture a guess that there's not one person in this room who believes that you can completely eliminate piracy over peer-to-peer networks or any Internet networks. In fact, the content industries can't eliminate piracy in the real world.
I was told by a content industry lawyer the other day, who works particularly on Internet piracy issues, she said to me, ''You know, the people in Los Angeles are telling me forget about this Internet stuff. We've got people in Taiwan,'' and so——
Mr. ISSA. I hope they said China, not Taiwan, if you don't mind my interjecting the exact location.
Ms. SOHN. Okay. I don't know for sure.
But the larger point is, you can't eliminate it. So the question is, how do you limit it, all right? And I've given four solutions: enforcement of existing laws, employing noninvasive self-help—I am not anti-self-help—promoting competition, and educating the public.
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Now, you know, if Ms. Rosen and her colleagues thought that educating the public was so worthless, they wouldn't be undergoing this campaign and having a huge full-page ad in the L.A. Times and the New York Times. And frankly, I commend them for it.
And my organization, which is brand new, is going to seek to do the same on the citizen consumer side. I don't think that those four things taken together are worthless. I think, actually, if they start to percolate, we could have some positive solutions.
My concern is, and this has always been the concern, that in the effort to stop piracy, you harm legitimate uses of computer technology and consumer electronics. That's what I care about. I care about innocent users getting hurt in the crossfire.
And that's my concern with this bill, is that it permits that. Can this bill be saved? I don't know. Again, to use a phrase I said to the Chairman, the devil is in the details.
And something that's much more narrow—I respectfully disagree with Mr. Berman, this is not a narrow bill. There are loopholes in this bill that you could drive trucks through. And the fact of the matter is—and my biggest problem with this bill is that it shifts the burden, okay? It shifts the burden of using these techniques—okay, the content industries have been using them very sparingly and very cautiously. In fact, when you ask Mr. Saaf who are his clients, he won't tell you, okay?
But by giving them this safe harbor, it shifts the burden on to consumers to start bringing lawsuits. And the fact of the matter is, unless there's a huge amount of damages, consumers are not going to bring lawsuits. They're not going to sue. And that's my concern, is the shifting of the burden.
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Mr. ISSA. Okay. And I guess I'll just shift for one quick one.
Mr. Galdston, I guess what I'd ask you is, you know, you've been fairly silent. No one seems to ask you any questions. But you're the person who gets ripped off.
My question to you really is, can you tolerate the status quo? And if not, would you agree that the industries that facilitate it need to do more or we need to act? It's a tough question. [Laughter.]
No, it's not, with all due respect. No, we can't tolerate the status quo or I wouldn't be sitting here. I could be writing a song right now.
In my testimony, I did my best to distinguish the people who I unofficially represent from the business, the record business, through whom we earn a fair amount of our money.
What I hear here that is so disturbing is, I appreciate the refinement of the bill. I even appreciate the phrase ''the devil's in the details.'' Not a bad title, by the way. [Laughter.]
But it seems to me that what this bill, as I understand it—and I'm not a lawyer and I'm, once again, not saying it can't be improved. But what it does that I'm aware of is, first of all, it draws a line that hasn't been drawn before. And it says that, across that line, there's a safe harbor for us as we try to protect or defend ourselves.
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At the same time, that safe harbor lowers our liability or clarifies our liability. At that same time, it increases our liability should we make any mistakes, should me make egregious moves.
I appreciate what Ms. Sohn has to say, for example, about not shifting the burden to the consumer. But if we're trying to balance here, tell me who the burden is on. The burden is on us. We are the ones—talk about fair use. I mean, I can roll out the phrases. Fair use? Is it fair the way it's working right now, meaning the download system? Or talk about killer app. Well, who is it threatening to kill? The people in our position.
So I will admit right out in front, not being an attorney, that there's a balancing act here. But as for accepting the status quo, absolutely not. I can't see how it's going to work.
Mr. ISSA. Thank you.
And thank you, Mr. Chairman.
Mr. COBLE. Thank you, Mr. Issa.
The gentleman from Florida, Mr. Wexler?
The gentleman from New York, Mr. Weiner?
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Mr. WEINER. Thank you, Mr. Chairman.
I have a question that's part public relations and part technical. Most of the popular shareware programs or the popular peer-to-peer programs allow you to turn off the ability of someone to come in and download from you. And we've got that chart up that talks about the dangers that are created by allowing people to come in and look around your computer.
It might be a better, frankly, public relations way to approach this thing to scare the bejesus into people to switch off the ability to download off their computer. You know, essentially go and say zero downloads is the amount; I don't know now you do it on the different programs. ''Zero uploads that I'll permit from computer.''
If you can scare enough people into it, it doesn't matter if the peer-to-peer network keeps working. If people are so frightened about the idea—in fact, deluge the market so that—every time I open up my mailbox, I get a CD-ROM from AOL offering—you know, deluge the marketplace with software to protect yourself from having anyone come in to look at it that automatically activates the turn-off switch on all of your things.
So I have a—by the way, I should tell you that over the break, Mr. Chairman, I was alarmed to learn that all of this talk about ''Harry Potter'' book reports on the Internet has led to a flurry of sixth graders searching for them. [Laughter.]
Teachers and principals everywhere are chagrined that a book report is available to be shared.
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But if you can just, Ms. Rosen, perhaps talk about that as a hand-in-hand effort to your ''don't do it because it's immoral.'' I mean, let's scare folks.
And then I'm going to ask about the technical ability to maybe do that somewhere outside the person's computer. You know what I'm saying? Like somehow figure out a way that you're not going into my hard drive but you're creating some kind of a wall or a filter.
But first on the public relations side, because that's something that we all kind of fear, that someone is coming in and looking around my computer anyway. If we can figure out a way to convince people to just switch it off, so you still have your stuff in there technically but you're not—because I always wondered my more people didn't do that, you know, just say, ''All right, I'll take, but I'm not going to give.''
Ms. ROSEN. Well, it's funny you should say that. And I should clarify. We've stopped telling people this is immoral because, as politicians know, if you try and convince people of right versus wrong, they have to be starting from the same set of value judgments that you're starting from.
What we discovered more recently than we should have was that people don't really want us to tell them whether it's right or wrong. What they want us to tell them is whether it's legal or not.
And that's what we have started to do.
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But as part of this campaign, we have a component which we call ''check the box,'' because everyone of these services, these client softwares that you download into your system, essentially give you the option to not share—''share,'' in quotation marks—your music or copyrighted files, more importantly, or any of your files, your bank accounts, your personal book reports, anything you want to protect.
Mr. WEINER. Under KaZaA, just so we understand each other, you can have entire programs that are downloaded to you to a CD, right? You can have entire programs from your computer taken down, not just individual songs.
Ms. ROSEN. Once somebody opens up the hard drive to these networks, they've already violated their own privacy. They've taken that into their own hands.
Mr. WEINER. So you're already looking at doing that on the public relations front.
Ms. ROSEN. So checking the box is an important component. But the bigger picture I think is—and maybe this is a public relations issue as well. We're in the position, as Mr. Issa said, where we get platitudes—and this is no offense to Ms. Sohn, who I think is smart and articulate. But we get platitudes from people about how they're worried about the margins of the abuse. But everybody agrees that, you know, illegal downloading is wrong and the stealing isn't right and copyright owners ought to be able to deal with their infringement.
Everything that we try and do, though, gets fought by this community.
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Mr. WEINER. I don't think anyone would fight—I shouldn't say that. I imagine it would be very hard to argue that you should fight an individual's choice to switch it off. So I think that's something you should continue to put—Mr. Saaf, if in the few moments that I have remaining, can you tell me, technically—your statement was a little bit vague and maybe that's because you want to kind of operate without really people knowing how to countervail what you're doing.
But is there a way to do kind of what we do with viruses but kind of one step away from my computer somehow? Is there some way to—I mean, I'm a little creeped out by the idea that Sony or someone else is going to come in and start poking around my computer and say, ''I don't like what you're doing here.'' Is there some way to keep that relationship kind out in the ether a little bit more, to stop these transactions from happening in a way that perhaps can assuage some of our concerns about our piracy?
Mr. SAAF. There's no way to practically do that without individuals actually agreeing to put something on their computer.
If individuals who ran these peer-to-peer programs agreed to run some sort of program on their computer that could turn off the sharing, so to speak, yes, that could be done.
Mr. WEINER. Do you have the ability to write a program that will go into my computer and press the button?
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Mr. SAAF. No, not without either putting it on your computer or tricking it onto your computer. There has to be some way to get the program on your program to actually change the settings.
Mr. WEINER. You download a program that's a spoof that includes it a little microprogram that turns off the switch, that's not technologically possible?
Mr. SAAF. It certainly is. It certainly is. I mean, that might be the type of thing—but that's not the type of thing that we engage in. The main reason for that is that we only participate in the peer-to-peer networks according to the rules of the peer-to-peer network. If the peer-to-peer network allows searching, we might do something to try and affect the searching. If the peer-to-peer network allows downloading, we might and try and do something that allows downloading. Actually putting a program on somebody's computer, you know, that might overstep some bounds.
Mr. WEINER. Got it. Thank you.
Mr. COBLE. I thank that gentleman. Are you through Mr. Weiner?
Mr. WEINER. Yes, sir, unless there's a chance for another question.
Mr. COBLE. Thanks, sir.
All right, the gentlelady from Pennsylvania. I say to her, we are still on our first round.
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Ms. HART. Wow. Thank you, Mr. Chairman.
And I'd like to echo also the comments of a number of the Members in their opening statements, that your leadership in this Committee, even though I've only been here a brief time, has been fantastic.
Mr. COBLE. Thank you.
Ms. HART. And I expect that you'll still be a leader on these issues.
Mr. COBLE. Thank you.
Ms. HART. A number of universities and colleges are located in the communities that I represent and also around the communities that I represent. I'm from the Pittsburgh area.
And they've expressed concern to me regarding the use of peer-to-peer services in their networks, on their networks. They say that the amount of traffic that these services have slows the university's network and that downloading of these files takes large amounts of space on the university's computers.
Can any of you speak to the impact that these networks have on universities in particular, and any efforts that you may be making to reduce the amount of file sharing on their networks? And I would assume not all of you would have an opinion on that, but those of you who do, I'd welcome it.
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Ms. ROSEN. Well, we've been spending a lot of time lately working with university leadership around the country for this very reason, because—in fact, they come to us with this notion of how do you find the balance between allowing their students to use their broadband capacity and their networks for legitimate uses but still prevent the massive amount of disruption that they are experiencing.
And they are experiencing massive disruption because of downloading copyrighted music and movie and videogame files, not because people are overwhelmed with an amount of fair use uses of scientific and technical journals. That's not what they're saying. They're saying they have a problem because of the stealing.
And there are solutions, but they're entirely within their control. They can deal with filtering their own network. They can deal with policies regarding use for their students. And they can deal with technologies that protect their own systems.
And I think more and more we're hearing that universities want to begin to employ those systems because of the costs associated with the burden on the network.
Ms. HART. Your involvement, then, has more or less been that they have asked——
Ms. ROSEN. Yes.
Ms. HART. They've shared with you basically that there's a problem.
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Ms. ROSEN. They know their students are violating the law.
Ms. HART. Right.
Ms. ROSEN. They know that their students are at risk legally. They know that there is a secondary liability that extends to them if they don't take steps.
But I think more importantly is—which is why I think they come to us to try and figure out whether we have tools to offer them.
But I think more importantly, they feel it's in their own self-interests because of the points you raised. They're concerned about their own costs and burdens.
Ms. HART. Okay. So you'll continue that cooperation with them as well?
Ms. ROSEN. Yes.
Mr. GALDSTON. Ms. Hart, may I just add something to that?
Ms. HART. Sure.
Mr. GALDSTON. Anecdotally, I'm sure we're all aware of some of these issues at universities, and I don't have anything much to add about that. But I would draw your attention to a statement that I can't quote verbatim, but released by the administration at USC recently to its students as they started the fall term, clearly explaining to them, clearly attempting to draw the line and educate them as to what is legal and what is not legal, what is authorized and what is not authorized.
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I think as we try to balance education—and I can tell you, not in this capacity, but I'm very involved with ASCAP, I'm a trustee of the Recording Academy. We're all working on education programs. We participated in the program that Ms. Rosen talked about.
But we're looking for this balance once again, and this is the key. It's great to tell everybody that it's bad. And it's important. It's essential. It's what I said in my statement; it's what I tell my children.
But we have to be looking for other measures to protect ourselves or help us help ourselves.
Ms. HART. Did you say it was USC?
Mr. GALDSTON. Yes.
Ms. HART. Okay, good. We're going to have to follow up with them after a term and find out if they see any difference in the problems that they've had.
Mr. GALDSTON. Yes.
Ms. HART. That will be interesting to see.
Carnegie-Mellon is near me, so we have a lot of students who clearly have a lot of talent. [Laughter.]
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It's been a bit of a problem, actually, as a result.
I have a question specifically for Ms. Sohn. I have very little time, but it's regarding the comment in your testimony: peer-to-peer networks, that copyright enforcement measures may seriously tax them by making them less efficient and more unstable. I agree that there's a great potential in this kind of technology, but I've been told about and I've also seen the amount of illegal materials, as we've discussed today, infringing on content, having pornography appear, and other things that shouldn't.
Isn't this content seen as being equally taxing on the legitimate potential of these networks? Do you see that as a problem? And how is this activity, the legal activity especially, contribute to the efficiency and stability of this peer-to-peer technology? And isn't it possible that effectively deployed countermeasures in the long run might help to cleanse these networks of the illegal activity and actually facilitate a positive and legitimate use of that technology?
Ms. SOHN. I agree with your initial assessment. I mean, you know, the fact that there is a great deal of illegal activity and the fact that—is actually harming these networks. I mean, not only from a technological perspective but also really from a public relations perspective.
I mean, one of my concerns is that, you know, the focus is so closely on abuse here, that sometimes, you know, the good uses of these networks are not seen.
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The problem with engaging in self-help, particularly of the kind—the invasive kind that I talk about, is that it escalates the bad network activity and invites more. It invites more defense. Again, KaZaA is already starting to do that.
So I don't think, you know, while I think that a lot of illegal activity is not helpful for the network, okay, I think if you continue on with more self-enforcement and anti-self-enforcement and anti-anti-self-enforcement, that will even make the networks less stable and less viable.
Ms. HART. Okay, I see my time is up. Thank you, Mr. Chairman.
Mr. COBLE. Thank you.
Ms. ROSEN. Mr. Chairman, I know Ms. Hart's out of time, but could I just respond to that for—I'll try and be really brief.
Mr. COBLE. Okay. We're going to have a vote in about 20 minutes, but go ahead, Ms. Rosen.
Ms. ROSEN. Well, I just think that the point that was just made by the Congresswoman and Ms. Sohn is so relevant to the problem here, which is that these networks, you know, they're not trying to solve their problem. They're trying to facilitate their use and gain more users by doing measures like that.
So if all of the people who were so worried about maintaining the good uses of these networks and the purity of these networks would put as much pressure on Sharman and KaZaA to clean up their act as they put on us against our efforts, this problem would be dramatically different.
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Mr. COBLE. I thank the lady.
Let's try a second round folks. As I said, that bell is going to ring in about 20 minutes.
Mr. Saaf, we have circuitously discussed this question. Let me try to put it to you in maybe clearer terms: How can peer-to-peer piracy prevention technologies ensure that only unauthorized uses of copyright material are prevented without also preventing legitimate file sharing?
Mr. SAAF. Yes, that's a very tricky question. There are certainly many, many identifiers a file has on a peer-to-peer network. That example that was presented by Mr. Boucher I felt was a very peculiar example because, you know, automatically, you're not going to flag things that are text files or flag things that are not MP3s or not movie files. That's just almost silly. I don't really understand how that example even—that's, I think, maybe a one out a million situation.
There are things from file name identifiers. Oftentimes file name identifiers are a great way to, you know, get through it, because most things labeled ''Harry Potter'' on the network are, indeed, ''Harry Potter.''
Obviously, file type identifiers are very important. File size identifiers are very important. But even cutting through all of those, all the peer-to-peer networks have different types of hashing technology that they use within their network to identify files so that they can splice those files together, so that they can do all their magic behind the scenes.
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Those same types of things are available to companies like ours to identify files to extreme certainty.
Mr. COBLE. I thank you.
The gentleman from Virginia.
Mr. GOODLATTE. Thank you, Mr. Chairman.
First, let me assure the gentleman from New York that there is software on the Internet available to all those teachers to search out the book reports. [Laughter.]
So it's probably not a very copyright——
Mr. WEINER. I've got my money on the sixth graders. [Laughter.]
Mr. GOODLATTE. The University of Virginia has had a big to-do about that.
Let me ask Ms. Rosen and then Ms. Sohn, Congressman Boucher suggested a modification to this legislation that I would not agree with, that I would be concerned about, where he said, list the specific things you want to do in the legislation, and then we'll review those and approve it. I think that's a very bad idea because the technology changes so rapidly that you couldn't possibly expect the slow-moving Congress to keep up with those sixth graders or anybody else that is developing technology to enable people to use this.
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But what about some parameters that address some of the concerns that have been raised today? Are there some things we could say, in this bill, ''Don't do this particular thing''?
Ms. ROSEN. I would certainly support whatever narrowing of the carve-out that people think are appropriate to guard against the sort of attacks that people seem to be so worried about. Although, again, I point out, that can exist today and it shows up.
But I think the problem with going the route that Congressman Boucher says is almost like saying, ''Well, for assault laws, we're not going to say you're not allowed to hit somebody. What are statutes are going to say is: You have to kiss. You have to be nice. You should hug.''
It doesn't—there just aren't enough things and ways to talk about what you ought to do. What Congress' responsibility, I think, ought to be is to delineate the things that you don't think ought to be allowed.
Mr. GOODLATTE. Right. I agree. I agree.
Ms. Sohn, do you have some specific things that you'd like to see in this bill that, say, we should not do?
Ms. SOHN. Well, there are a lot of parts of this bill that—clearly that are problematic and in my written testimony.
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But just to sort address the point of being specific, I guess I don't have as much of a problem with being specific because you can always write into a bill a review, a subsequent review, to, you know, look at new technologies. The Federal Communications Commission does that all the time. They do it, for example, with universal service.
So if you actually list the self-help techniques, it doesn't mean it's frozen there if, you know, include some sort of periodic review.
You know, I'm not opposed to some sort of——
Mr. GOODLATTE. Let me interrupt you on that point and say, instead of having to update this every time technology changes, what if, initially anyway, until we found out whether some of the concerns expressed were correct, what if we had a sunset provision in this bill, so that it was allowed for a year or 2 years or something, and then come back one more time for reauthorization following that sunset? But not to look to try to always come back forever and say, ''We're going to list these specific technologies, and we're going to update them and change them,'' and so on every time we do it.
Ms. SOHN. Well, that's, you know, that's another way to go about it. I mean, a third way to go about it is just to really, you know, narrow the definition, if you can even do it technologically, and I don't know, of some of these self-help techniques. Instead of naming them particularly, you know, talk about the actual functionalities of the technology.
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I mean, like I said, my organization, you know, will not support safe harbors for technologies that are invasive. Reasonable, noninvasive, don't lead to denial of service, then, you know, we can start to talk.
Mr. GOODLATTE. Well, if you have any specific things along that line of parameters, please submit them to the Committee.
Ms. Rosen, what do you think about a sunset provision?
Ms. ROSEN. I can't speak for everybody, but I think it's a very interesting idea. It's something—we certainly think this whole thing is an experiment, so——
Mr. GOODLATTE. Let me ask one other question that's related very much to this. I understand the issue in the Recording Industry Association of American case with Verizon, one of the issues is whether a provision in the Digital Millennium Copyright Act that provides and expedited process for ISPs to turn over subscriber information for alleged infringers applies to peer-to-peer files, file sharing.
When Congress passed the DMCA, we intended that provision to provide the copyright owners with quick access to this information, so they can go after the infringers directly and take the ISP out of the middle of the process. If the court finds that the DMCA does not apply in this situation, and I think it should, should the law be updated?
Ms. ROSEN. I can't get away from this issue. [Laughter.]
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You know, I think, actually, the Verizon dispute is very relevant to your last question, because what we're sort of faced with is, we've had a great relationship with the ISPs for several years after the DMCA passed. I think even they would say we were careful and thoughtful about the kinds of things we asked them to do.
But what happened when the DMCA was written was that it said—it was technology-specific. So it said, you know—at the time, all the files—nobody had enough capacity on their computers. All the files were always hosted on the ISP's server. It wasn't that that was a deliberate strategic policy decision to write the bill that way. That's just how the technology was working then.
And so that's what the bill says, that when the, you know, the ISP has the responsibility when the file is on its server to give the name of the person who posted the file on their server to the copyright owner. Now that the file's not sitting on their server, but they're still their customer, they're still providing the exact same access, Verizon and others are taking the position, ''Well, it's all different now, because that's not what was intended.''
But I believe it is what was intended. It's just that the files are technically in these peer-to-peer networks, sitting on an individual's computer instead on the ISP server. But everything else is the same.
So the ISP's logic about privacy doesn't really fly, because they would be—they would give us the name if the file were still hosted the way it was a few years ago. And in fact, they did give us the names then.
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So it's very unfortunate, an unfortunate result of statutes being too technologically specific.
Mr. GOODLATTE. Mr. Chairman, I see my time has expired. Thank you very much.
Mr. COBLE. The gentleman's time has expired.
The gentleman from New York.
Mr. WEINER. Thank you.
Ms. Rosen, I just, as we've been speaking about this, been jotting down the things I think consumers are looking for as a way to wean them, and I'm sure you've been spending an enormous amount of time thinking about this as well. I'm just going to go down this list of six or seven items, and if you can just give me a yes or no, do you think the industry has found a way to package it to essentially compete with the things that the——
Ms. ROSEN. I promise you, there's no yes or no on these, but go ahead.
Mr. WEINER. I bet you there is. I bet you there is.
Speed? Is the speed of download that's offered at the sanctioned sites comparable or better than what's being offered on KaZaA's?
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Ms. ROSEN. Yes, because speed relies on the person's Internet access.
Mr. WEINER. Right. I understand.
Reliability? When you go to click on something, it's going to be the song that you think it's going to be?
Ms. ROSEN. Yes.
Mr. WEINER. Can you get the old stuff?
Ms. ROSEN. Sometimes.
Mr. WEINER. That's a no.
Ms. ROSEN. Sometimes.
Mr. WEINER. I'm just giving you some working notes on when you go back to the shop, to figure out how far you are, because I happen—you know, I'm doing this because I think that, frankly, at the end of the day, whatever tools we give you, the marketplace has to be persuaded. And this is what——
Ms. ROSEN. I agree.
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Mr. WEINER. You've come to the conclusion as well.
Ms. ROSEN. And I say that frequently.
Mr. WEINER. Right.
Security? You're probably yes, you're much—your probably much further along in security concerns than the other guys are.
Ease of billing? Is it a relatively easy matter when someone goes onto one of these sites? I mean, is billing fairly easy?
Ms. ROSEN. The billing is much easier, but it's not quite as easy on KaZaA. [Laughter.]
Mr. WEINER. I bet.
The ability when you download something to put it onto a CD? Can you do that with your services?
Ms. ROSEN. Often, but they're tiered. You buy certain services and maybe you pay an extra $.99 if you want another track.
Mr. WEINER. Bad idea. Bad idea. Pain in the—you're making—it's a pain in the neck. [Laughter.]
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Reasonable price? Like, what does it cost if I wanted to respond to this idea that there's only one good song on a record, what would it run me, if I buy a package of 10 songs or however you do it? Is it about a buck, you said?
Ms. ROSEN. Well, most now are subscription services where, you know, it's anywhere from $10 bucks to $25 bucks a month for all you can listen to, so it depends.
Mr. WEINER. Okay. And do they go puff at a certain point and disappear from your hard drive?
Ms. ROSEN. Depends on what you pay for. See, it actually works like the real world works, which is, depending on what you want, you have choices about your purchasing packages.
Mr. WEINER. Right. But I want to get——
Ms. ROSEN. But the real issue that we haven't gotten to, which I think is the point you're making, is, there's not enough of the legitimate content on all of the sites in all of the various ways consumers want it.
Mr. WEINER. I was leaving that one to the last, the element that one-stop shopping is not anywhere close to be——
Ms. ROSEN. But I think we're quite close.
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Mr. WEINER. Okay. Well, let me just tell you, I think that, you know, I happen to agree with the tenet of what Mr. Berman has argued that we need to facilitate this stuff. But there has to be a recognition—and I sense from you that it is, and I've sensed from other folks in the industry that there is—that you're still putting a pretty hasty product out there to compete with something that is not only pretty good but it's really cheap.
So I think that in addition to making the argument that it's illegal, in addition to making the argument that it's immoral, in addition to trying to figure out technological solutions, the real way to slay this beast is the way, frankly, this industry is evolved, and that is that you just come up with a better enough mousetrap. You add content, or whatever it is. And I'm sure you're thinking about this, but I think, still, that should be the focus, making the better product.
And if I can just conclude by finishing up with you, Mr. Saaf, about technology. Virus software that stops viruses from coming in——
Mr. SAAF. Yes.
Mr. WEINER. You install, essentially, something on your hard drive that looks at information that comes in from without and tries to make an assessment whether a known virus is there.
Mr. SAAF. Right.
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Mr. WEINER. Okay. From my just brief understanding of this—and you have been remarkably kind of circumspect about it. I mean, I still can't get my hands around what it is you do.
From my understanding of this, it's essentially a virus software program that stops things that are not supposed to go out or in from going in or out. Is there a way to do that at the ISP level?
Mr. SAAF. Well, there certainly is a way. I mean, you know, the difference between virus software and what we're talking about here is that people choose to install virus software on their computer. And this is sort of—I draw the analogy to the virus/anti-virus industry, but it's almost the opposite.
Mr. WEINER. Right.
Mr. SAAF. At the ISP level, there may be. I mean, to be honest, I haven't done a lot of technology research into that.
Mr. WEINER. You know, I'm about ready to ask that you be sworn in. I don't know what the heck it is that you do. [Laughter.]
Mr. SAAF. Well, I would be glad to—I mean, I have two examples, basically, that I came here with, and that's decoying—obviously well-understood, create a needle in a haystack situation. And then the other technology I wanted to lay out as an example was indirection, which interdiction means that you have—you know, that pitcher is the potential uploader, and he has five upload slots on his computer, and MediaDefender tries to fill all five of those upload slots, preventing the potential pirate here from being able to get in line to download the material.
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Mr. WEINER. I see. So it's essentially an elaborate decoy program.
Mr. SAAF. Yes. It's using the peer-to-peer network exactly as it's intended to be used. That's why I make the point that, if we weren't downloading it, somebody else would be. And we do so at a throttled down download speed, so we're not being—we're being less aggressive on the person's computer than the peer-to-peer network would be naturally.
Mr. WEINER. Got it. So it's the equivalent of having a moving roadblock, where you essentially slow things down and eventually someone says, ''I'm going to get off this service and try another one,'' and they eventually get frustrated.
Mr. SAAF. And the reason it's important is it's like putting your finger in a whole in a dam. If you don't do something like that, you have this, boom, exponential growth of the pirated material. And even by the time you get that one guy to take it off his computer, 50 guys are sharing it up.
Mr. WEINER. Got it.
My time has expired.
Ms. Sohn, you don't have a problem with that, do you?
Ms. SOHN. Well, one of the things that I do have a problem with is, when he's blocking——
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Mr. WEINER. Can you speak into the microphone?
Ms. SOHN. I apologize.
When he's blocking the infringing file, he's also blocking the entire rest of that person's hard drive, okay? There's no such thing as selective——
Mr. WEINER. He's blocking the outgoing veins of the operation.
Ms. SOHN. No, no, no. No, no, no. The incoming.
Mr. WEINER. Incoming, outgoing. Irrespective of that, he's taking existing lanes that are available on these things and essentially filling them up. Isn't that just essentially an elaborate decoy or something like that?
Ms. SOHN. Well, no, my understanding about how decoy and spoofing and the like works is that a downloader has to affirmatively take an action, okay, to get a file, to get an illegal file, and then they get something that's other than that, okay? With what Mr. Saaf does with interdiction, there's actually a third party—I don't like to use this because this it is rhetorical, but it's the best word I can come up with right now—is actually attacking your hard drive.
And from what I understand, and Mr. Saaf and I have a very long discussion on the phone last week, is that you can't just block one file. You've got to block the entire hard drive, and the person can continue to—tell me if I'm wrong; I'm not a technologist—the person can continue to download, but other people can't access their file—their hard drive.
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Mr. SAAF. The first thing I would say is that uploader certainly is taking an affirmative action. To say an uploader, somebody who is providing stuff for uploading from them, they are certainly making the decision to run that program on their computer. And like you made the point, they can check that box, if they don't want people uploading. So that have made a decision.
We're also making a decision to download from them, like anybody else would be downloading from them. We're not hindering any of their other uses of the Internet. They can still do their e-mail, Web browsing, all that great stuff. We don't use up a lot of bandwidth. They can even still download pirated material on the peer-to-peer network while we're indicting them.
The only thing that's inhibited is their ability to upload to that peer-to-peer network.
Mr. WEINER. It sounds like hoisting them on their own petard, no?
Ms. ROSEN. Yes.
Ms. SOHN. Well, except——
Ms. ROSEN. Exactly.
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Ms. SOHN. Unless the hard drive includes——
Ms. ROSEN. That's what it is.
Ms. SOHN. Unless their hard drive includes noninfringing material.
Mr. WEINER. But the hard drive isn't—it's kind of the vein to the outside world is being clogged, not their hard drive. It's essentially using, you know—anyway.
Thank you, Mr. Chairman.
Mr. COBLE. Thank you, Mr. Weiner.
Folks, let me——
Ms. ROSEN. Mr. Chairman, I'm so sorry to do this, but my lawyers won't let me come home if I don't do this.
Mr. COBLE. All right.
Ms. ROSEN. I misspoke about the Verizon piece. The identification portion of the DMCA, Mr. Goodlatte, doesn't distinguish between where the files are hosts. It's the takedown provision that makes that distinction. And the dispute is over whether the identification provision should be interpreted differently than the takedown provision.
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Mr. COBLE. Now your lawyers will permit you entry into the office, Ms. Rosen.
Ms. ROSEN. Thank you.
Mr. COBLE. Folks, let me think aloud for a minute. I want to thank the panelists. I want to thank the very patient people in the audience who have stood with us.
It is my belief that many people who illegally download, who commit piracy, larceny, call it what you will, most of these people I don't believe would go into a department store and steal a towel set or go into a hardware store and steal a saw and a hammer. But am I missing something when I say it still comes under the same heading of larceny? I think I'm not missing it. I think it's larceny.
And, folks, I'm concerned about this. I think this has been a good hearing. I appreciate the interest that you all in the audience have shown.
Without objection, I want to introduce into the record Mr. Conyers' statement, Mr. Hyde's statement, and an article that appeared in yesterday's Washington Post entitled, ''Burned by CD Burners.'' It was authored by a person who formerly operated a record store in California. And he wrote in his article, ''Competing against rivals, even against huge national chains, is one thing. But no one can compete against free.''
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[The prepared statement of Mr. Conyers follows:]
PREPARED STATEMENT OF THE HONORABLE JOHN CONYERS, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN
Peer-to-peer networks have numerous uses in education, research, professional development, and entertainment, but many have chosen to exploit their capabilities to pirate copyrighted works. I believe this piracy is one of the biggest threats to the content and technology industries, the two industries that have contributed more to our national economy than just about any other.
The same people who wouldn't even think of taking a candy bar from a grocery store—or a shirt from a department store—think nothing of downloading thousands of movies and songs every day from the Internet. They say that it's so easy to take content from the Internet it must be legal and the copyright owners make too much money anyway. In fact, this type of file sharing is nothing less than ''virtual shoplifting.''
Those who advocate for free file sharing simply don't understand that the money that they refuse to pay goes to all of those who contribute to the creative process. It threatens the viability of record labels, technology companies, and movie studios, and impacts the livelihoods of their employees, artists, actors, songwriters, other creators, and their families.
And we can guess the impact is serious because, on the music side, sales are down this year 10 percent over last year—and last year's level was the lowest since 1993. I'd like to say that it's interesting that people who support file sharing never make their own movies or music available for free on the Internet. In my mind, there is no question that it is wrong, and numerous court decisions have upheld that answer.
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The real question is what should be done about it. There has been a lot of movement this year, including hearings in Congress, bills, and deals within the private industry. For instance, the record labels have started to let consumers stream and burn music off the Internet, and the major movie studios and IBM just announced they are working to allow rentals of digital videos. And the broadcasters reached a deal several months ago with the technology companies on how to protect broadcast content from piracy.
It's important to know what the next step should be and what role Congress should play.
[The prepared statement of Mr. Hyde follows:]
PREPARED STATEMENT OF THE HONORABLE HENRY HYDE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS
Thank you, Mr. Chairman. It has been asserted in the press recently that the rule of law does not apply on the Internet. That taking a DVD or a CD from a store without paying for it may be illegal and should be prosecuted, but that taking the same movie or music off the Internet without paying for it is lawful and should be tolerated. As illogical as this seems, the assertion has been made over and over again by those who either seek to get something for free, or by those who make products on which free movies and music can be enjoyed.
I disagree with the assertion. Principles and laws must be upheld and enforced regardless of the medium. Theft is theft. To argue that bank robbery is illegal, but use of the Internet to steal the same money electronically is lawful is an absurd proposition. Yet when it comes to intellectual property, the argument is advanced by some academics and industry groups as valid. They argue that the nature of intellectual property vis-a-vis real or personal property justifies the taking. Or that it is ''fair use'' to take an entire work for nothing more than personal enjoyment even though it was never purchased by the user.
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Our nation's copyright laws serve a specific purpose—to protect our creations. It is a simple concept that has spawned the world's most sought after movies, music and software. And I applaud the Department of Justice for recently announcing that it will enforce our intellectual property laws on the Internet just as it would in the physical world.
The concept of peer-to-peer technology, empowering individuals around the world to share information on each other's computers, while creating many of its own security and privacy concerns, holds great potential. So far, however, this great technology has been used primarily to allow individuals to copy movies and music on other people's computers so that purchasing the CD, renting or buying the DVD, or even going to see a movie is unnecessary. And because of the nature of the technology, the piracy occurs at a staggering rate. No creator can survive if this remains unchecked for too long.
Technology should advance, but principles and laws should apply consistently. The public needs to understand that Internet theft is no different than any other, and I app laud you, Mr. Chairman, and Mr. Berman, for holding this hearing to help achieve that purpose.
Thank you.
[The Washington Post article follows:]
Burners1.eps
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Burners2.eps
Mr. COBLE. Now, folks, I think that's the issue that plagues us today. Hopefully, we will be able to resolve it in due time.
To indicate to you what I said about the scare tactics—I don't want to bore you all with this, but a friend of mine overheard two staffers discussing this legislation in the Rayburn cafeteria weeks ago.
And one said, ''Oh, Mr. Berman has introduced this terrible piece of legislation, and Mr. Coble has co-sponsored.''
''The sky is falling,'' my friend thought as he heard these two exchange these ideas. And my friend said he couldn't resist doing this, he said, ''Well, why is this such a bad piece of legislation? What's your source? What's your authority?''
This is the answer: ''Oh, this fellow follows electronics issues real closely, and he assures me this is bad.''
Now, this is the sort of vague misinformation going around this thing. And, folks, I don't suggest to you all today that it's all black or white. Very likely, it's subtle shades of gray, as are most issues with which we deal up here.
But, again, I thank you all for being here. I think it has been a good hearing. This matter is not going to be pronounced dead today. The last rites will not be announced today. It will be revisited.
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This concludes the oversight hearing on piracy of intellectual property on peer-to-peer networks. The record will remain open for 1 week. Now, I repeat that: For 1 week the record will remain open, so if anybody wants to weigh in, feel free to do so.
The Subcommittee stands adjourned.
[Whereupon, at 12:45 p.m., the Subcommittee was adjourned.]
A P P E N D I X
Material Submitted for the Hearing Record
PREPARED STATEMENT OF THE HONORABLE LAMAR SMITH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
Mr. Chairman, the Internet has revolutionized our lives. News, entertainment, information, and education are accessible at the click of a button. But for as many legitimate opportunities as the Internet presents, it also presents temptations to break the law. This hearing highlights some of those, such as illegal downloads over peer-to-peer networks and other forms of intellectual property theft.
Most people would not shoplift a CD in a retail store, but some have a different attitude about downloading the same copyright protected CD using P2P software on the Internet.
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Shoplifting and unauthorized downloading of intellectual property are both illegal. Both represent a direct threat to the livelihoods of U.S. copyright creators, including songwriters, recording artists, musicians, graphic artists, journalists, novelists and software programmers.
I support strong private property rights and believe that copyright owners have legitimate concerns about the theft of their property using P2P software on the web.
Curtailing the theft of intellectual property is not confined to the Internet. For example, software companies use a variety of technologies to make their software inoperable if the licensing terms are violated. Satellite companies use electronic countermeasures to combat the theft of their intellectual property.
H.R. 5211, the Peer to Peer Piracy Prevention Act, seeks to address the illegal use of P2P services on a network. As with the software manufacturer that may imbed a code to disable a software program if it is illegally distributed or copied, so this bill seeks to authorize copyright owners to employ technology-driven strategies to prevent the unauthorized distribution, display, performance, or reproduction of their copyrighted works. The purpose of this bill is to discourage the illegal use of publicly accessible P2P services on the Internet.
Copyright owners have legitimate concerns about the theft of their property. Some advocate that the federal government dictate solutions to combat this kind of piracy on the Internet, but I strongly oppose this approach. The solution lies in the private sector, not with the federal government.
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This bill allows copyright owners to protect their own work. While I have some concerns about the details of this bill and how it would be implemented, I support the concept behind it and look forward to working on this issue in the future.
PREPARED STATEMENT OF THE HONORABLE HOWARD L. BERMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Chairman, I want to take a moment to reflect on your tenure as Chairman. For those who are unaware, Chairman Coble's tenure as Chairman of this Subcommittee ends with the 107th Congress.
I have tremendously enjoyed and deeply valued our relationship as Chairman and Ranking Member. You have ably led this Subcommittee through innumerable legislative and political challenges, and done so with characteristic charm, willpower, and an always easygoing demeanor.
Your record of legislative accomplishments as Chairman is great. The Digital Millennium Copyright Act. The American Inventors Protection Act. The Sonny Bono Copyright Term Extension Act. The No Electronic Theft Act. The Satellite Home Viewer Improvement Act. The Anti-Cybersquatting Consumer Protection Act. The Work Made for Hire and Copyright Correction Act. The Madrid Protocol Implementation Act. And innumerable other, less heralded bills.
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The American public owes you a debt of thanks for your dedicated service over the past six years. I owe you a personal debt of thanks for including me as a partner in the leadership of this Subcommittee.
Mr. Chairman, thank you for calling this oversight hearing on P2P piracy. There have been some truly outrageous attacks on the P2P Piracy Prevention Act, and I welcome this opportunity to set the record straight.
When we first introduced the P2P piracy bill, I never expected that anyone would challenge the basic premise of the bill: namely, that copyright owners should be able to use reasonable, limited self-help measures to thwart rampant P2P piracy.
Incredibly, some folks actually challenge that premise. The head of a big trade association claims it's legal to make unauthorized distributions of copyrighted works to 100 million P2P users. P2P software companies claim that, even if illegal, P2P piracy causes no harm. Representatives of the computer industry say that only record companies suffer harm, and they deserve it for charging too much. Others vaguely theorize that copyright owner self-help will threaten security or privacy. And still other piracy profiteers attempt to thwart any solution to P2P piracy, then throw their hands up and say it is an insoluble problem.
Let's start with a basic fact. Unauthorized distribution or downloading of copyrighted works on public P2P networks is illegal. To paraphrase the 9th Circuit in the Napster case: public P2P users ''who upload file names to the search index for others to copy violate a copyright holder's distribution rights. P2P users who download files containing copyrighted music violate a copyright holder's reproduction rights.'' Any attempt to say otherwise is a bald-faced attempt to rewrite well-settled law.
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Let's move to another indisputable fact. Massive theft of copyrighted works is the predominant use for public P2P networks today. There are now approximately 3 billion files P2P downloads a month. The vast majority of these downloads contain copies of copyrighted works for which the copyright owners receive no compensation.
Now another fact. P2P piracy doesn't just affect the bogeymen—record companies and movie studios. P2P piracy destroys the livelihoods of everyday people.
What do piracy profiteers have to say to Linn Skinner, a Los Angeles needlework designer whose livelihood has been destroyed by Internet piracy? Or about Steve Boone, a Charlotte small businessman who has watched P2P piracy decimate his karaoke tape company? How do they response to Mike Wood, a struggling Canadian recording artist who believes P2P piracy will derail his recording career before it gets off the ground? What do piracy profiteers say to the vast majority of songwriters who make less than $20,000 per year, and have yet to make one thin dime from the massive P2P piracy of their works?
Songwriters can actually quantify their P2P piracy losses. By statute, a songwriter is both entitled and limited to collecting 8 cents for every ''digital phonorecord delivery'' of sound recordings containing her songs. Each illegal P2P download of a song robs the songwriter of that 8 cents.
Those eight cents may not seem like much, but multiply 8 cents by the reported 3 billion monthly P2P downloads. It calculates out to $240,000,000 dollars . . . a month. Even 1/10th of that amount represents real money to the 5,000 U.S. songwriters.
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Now another fact. If piracy profiteers were truly concerned about security and privacy threats to P2P users, they would address the security and privacy threats posed by the P2P networks themselves. A recent white paper by the University of Tulsa Center for Information Security details how KaZaA, Gnutella, and other popular P2P networks expose P2P users to spyware, trojan horses, system exploits, denial of service attacks, worms, and viruses. A joint paper by HP Labs and the University of Minnesota details how the vast majority of P2P users are exposing personal information, such as credit card numbers, to every other P2P user. In fact, the U.S. Courts, the House, and the Senate all block the use of public P2P networks because of the security concerns they pose.
Do the piracy profiteers talk about these real security and privacy concerns? No. And you know why? Because it is the piracy profiteers who put the spyware on the computers of P2P users so they can surreptitiously collect their personal information and sell it to third parties.
Another fact. P2P companies could design their software to stop piracy, but they don't. Grokster has designed its P2P software to filter out pornography, but has it ever tried to filter out copyright infringements? Napster claimed it couldn't stop piracy, but after the court ordered it to do so, it suddenly found a way to stop most, if not all, piracy on its networks.
Rather than looking for solutions to piracy, P2P companies are designing their systems to be better piracy tools. Both Morpheus and KaZaA have upgraded their software specifically to impair the ability of copyright owners to proliferate decoy files through the networks.
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Based on all these facts, what can an objective person conclude other than that many companies plan to profit from piracy, and have no intent or desire to stop it?
I look at these facts and figures, at the faces of copyright owners, and I see a problem in desperate need of a solution. P2P piracy must be cleaned up, and cleaned up now. The question is, How?
My P2P Piracy bill is an important part of the solution. The Peer to Peer Piracy Prevention Act is quite simple in concept. It says that copyright owners should not be liable for thwarting the piracy of their works on P2P networks IF they can do so without causing harm.
You might reasonably wonder why we need to pass legislation giving property owners the right to protect their property against theft. After all, the U.S. Supreme Court has held that ''[A]n owner of property, who seeks to take it from one who is unlawfully in possession, has long been recognized to have greater leeway than he would have but for his right to possession. The claim of ownership will even justify a trespass and warrant steps otherwise unlawful.''
The problem is that a variety of state and federal statutes may create liability for copyright owners engaging in otherwise justifiable self-help.
This is not fair. Copyright owners should have the same right as other property owners to stop the brazen theft of their property. The P2P Piracy bill simply ensures that the law will no longer discriminate against copyright owners.
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Obviously, it is critical that a liability safe harbor be appropriately limited. In drafting the P2P Piracy bill, I tried to ensure that only reasonable self-help technologies would be immunized, that the public would be protected from harm, and that over-reaching or abuses by copyright owners would be severely punished.
The most important limitation in the bill is the narrow breadth of the safe harbor itself. The bill says copyright owners get immunity from liability under any theory, but ONLY for impairing the ''unauthorized distribution, display, performance, or reproduction'' of their own works on public P2P networks. If the copyright owner's impairing activity has some other effect, like knocking a corporate network offline, the copyright owner remains liable under whatever previous theory was available.
Some claim that the bill is not limited in this way. Their claim appears to be that the bill gives a copyright owner immunity for anything she does, as long as it has the effect of stopping piracy on a P2P network. By their logic, the bill allows a copyright owner to burn down a P2P pirate's house if the arson stops the pirate's illegal file trading. Clearly, the bill says nothing of the sort, and no judge or disinterested party could read it that way.
The bill specifically states that a copyright owner cannot delete or alter ANY file or data on the computer of a file trader. Thus, a copyright owner can't send a virus to a P2P pirate, it can't remove any files on the pirate's computer, and it can't even remove files that include the pirated works.
The safe harbor does not protect a copyright owner whose anti-piracy actions impair the availability of other files or data within the P2P network, except in certain necessary circumstances. Some folks have raised concerns about this provision, and I am thinking about alternative language that could resolve their concerns.
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The bill denies protection to a copyright owner if her anti-piracy action causes any economic loss to any person other than the P2P pirate.
The safe harbor is also lost if the anti-piracy action causes more than de minimis loss to the property of the P2P pirate.
Finally, the safe harbor is lost if the copyright owner fails to notify the Attorney General of the anti-piracy technologies she plans to use, or if she fails to identify herself to an inquiring file-trader.
Obviously, these limitations would be meaningless if copyright owners did not have adequate incentive to obey them. The P2P piracy bill provides such incentives by subjecting transgressing copyright owners to MORE liability than they have under current law.
This is a critical point: If a copyright owner falls outside the safe harbor, an aggrieved party could sue the copyright owner for any remedy available under current law, AND for an ADDITIONAL civil remedy created by the P2P piracy bill. The bill also gives the U.S. Attorney General new power to seek an injunction against transgressing copyright owners.
The potential for liability under this wide variety of remedies provides copyright owners with strong incentives to operate within the strict limits of the safe harbor.
I think the P2P piracy bill provides a strong starting point for legislation enabling copyright owners to use reasonable self-help to thwart P2P piracy. However, I don't claim to have drafted a perfect bill, and I welcome suggestions for improvements. I note, however, that while I will listen carefully to those who wish to solve the P2P piracy problem, I will not be so solicitous of those who wish to profit from it.
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Thank you, Mr. Chairman.
PREPARED STATEMENT OF THE HONORABLE RICK BOUCHER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF VIRGINIA
Thank you, Mr. Chairman.
I appreciate the Subcommittee holding a hearing on the matter of music distribution across the Internet, but I'll have to confess a preference for a different focus than that of this hearing.
There is a need for legislative action in this Committee to facilitate the lawful distribution of music across the Internet in a manner that assumes that all owners of copyright are paid. Mr. Cannon and I have introduced a comprehensive measure, the Music Online Competition Act, each of the elements of which if enacted into law would help achieve that goal.
The Copyright Office has also recommended legislation to help achieve that goal.
The recording industry can achieve that goal if it will simply place entire inventories on the Web for permanent portable downloading at a reasonable price.
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There is a recent Jupiter Media Matrix study which shows that 2/3 of the public values the availability of a broad inventory of music, the assured quality of the download, and the ability to keep the music permanently and move it from one player to another in the personal environment, as more important considerations than price. These 2/3rds of the public would clearly be willing to pay a reasonable price if these other elements of quality, availability, and portability are present.
In my view the recording industry does not need the legislation which the Subcommittee is examining today. It should put entire inventories on the Web for permanent portable download at a reasonable price. That's the way to compete with the lower quality free peer-to-peer services.
Turning to the bill at hand, I question at the outset what it is the industry wants to do under the provisions of the bill that it cannot do under current law.
Spoofing is allowed now. Decoys are allowed now. Redirection to legitimate websites is allowed now. I hope the witnesses will be very specific about what it is that the industry wants to do by way of self help that it can't do at present. And I have other questions:
Would any of these intended self help mechanisms harm innocent Internet users by slowing down the speed of a shared network such as a cable modem service?
Would any of these mechanisms permit the recording industry to intrude into the personal computer space of an Internet user? If so, what are the implications of such intrusions for the privacy rights of individuals?
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If any damage is done to hardware, software or data owned by an Internet user, how would the damaged party know who to proceed against? After all, no notice to him is required under the bill that his space is being invaded or who is doing the invading.
What assurance will there be that material which is protected under the fair use doctrine will not be blocked or disables by a self help invasion?
What are the implications for the Internet's functionality when the inevitable arms race develops as countermeasures are used to block self help mechanisms? I can imagine that if the recording industry launches what amounts to denial of service attacks against Internet users, that denial of service attacks will then be launched against the industry with broad adverse effects on Internet speed and effectiveness to the disadvantage of Internet users generally.
These are a few of the matters that concern me. I hope these questions will be addressed this morning.
PREPARED STATEMENT OF DAVID P. MCCLURE
Mr. Chairman and Members of the Subcommittee:
My name is David McClure, and I am President of the US Internet Industry Association, the oldest and largest trade association representing Internet commerce, content and connectivity. USIIA was founded in 1994 by leading companies in the online services industry to represent the interests of individuals and companies that do business on the Internet.
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Our diversified membership includes Internet service providers from global and national ISPs to small providers serving remote areas nationwide; Internet backbone companies, telephone companies; hardware and software vendors involved in the technologies of the Internet; electronic commerce sites, and service providers to those sites. Our charter is to promote the growth of electronic commerce, content and connectivity through sound public policy and business support.
FIRST, DO NO HARM
I strongly urge this committee, and this Congress, to take no action at this time on the issue of peer-to-peer file sharing. First and foremost because this issue is neither large enough nor serious enough to warrant the attention of the distinguished members of Congress. And because the Internet and music industries are capable of resolving this issue without the intervention of the federal government.
In this we agree with Hilary Rosen, President of the Recording Industry Association of America when she noted, ''Congress cannot keep pace with the marketplace, and none of us should expect them to. The marketplace can handle this. The laws are there.''(see footnote 1)
There is a very real danger that the intervention of this committee and the Congress will serve only to harm the natural evolution and operations of the free marketplace, over-riding the interests of consumers and vendors alike in the pursuit of a balance that the marketplace itself will achieve more rapidly and more effectively if simply left to its own devices.
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PIRACY ON THE INTERNET
There is no question that some individuals misuse the Internet, and such Internet services as peer-to-peer file sharing, to trade in stolen intellectual property. No one within the Internet industry condones this activity, and the Code of Practice for our Association states clearly that:
''Members shall respect the rights of the owners of intellectual properties, including software authors and artists, providing proper diligence and reasonable effort to prevent the infringement of copyrights, patents and other protections.''(see footnote 2)
What is at issue is not whether this Internet piracy exists, but the extent to which it exists and the severity of its impact on the financial well-being of the owners of the intellectual property.
FILE-SHARING STUDIES
There is no credible means of correlating Internet file sharing with the loss of revenues by copyright holders. Any claims to quantify Internet piracy, or the impact of file sharing on the revenues of content companies, are little more than wild guesses.
Sales are declining in the music industry. They are down 6.4 percent for 2001, a decline that continues in this year. Forrester Research estimates that the industry will be a 6 percent decline in sales for 2003 as well. Yet revenues to the film industry, which equally claims to be suffering at the hands of Internet file-sharing, increased by 9.8 percent last year to reach an all-time record.(see footnote 3) The retail software industry, which also blames losses on Internet piracy, had sales of $105 billion in 2001, up 3% over the previous year. It is expected to see similar growth this year.(see footnote 4)
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What's more, studies on the habits of Internet file-sharers—Jupiter Media Metrix, Webnoize, Forrester Research, Ipsos-Reid Corp., and more recently by the Gartner Group—fail to substantiate the claims of heavy losses for content holders.
Forrester Research found that more than two-thirds of the CDs bought in the US sell to consumers who rarely or never download music files. Ipsos-Reid reported that 81 percent of file sharers buy as many or more CDs as they did before they began downloading music from the Internet. Jupiter Research found that 86 percent of veteran file sharers buy as many or more CDs as they did previously.
One independent study after another shows little or no decline in buying habits among file-sharing consumers. In fact, the evidence gathered by the Gartner Group and released this month presents a different view—that file-sharing is actually driving sales of music products, and that without the influence of the Internet the music industry might be suffering a greater decline in sales than it has today.
THE INTERNET SCAPEGOAT
The Internet and other consumer technologies have always been used as a convenient scapegoat for the music industry. The last time sales of music declined, in 1978, the industry blamed its woes on the cassette tape recorder and launched an aggressive campaign under the slogan ''Home taping is killing music.'' By 1980 it was clear that cassettes had not killed music. Instead, consumers had grown tired of Disco. Once the industry produced music that was more interesting, sales improved.
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There is no compelling evidence that the Internet is responsible for the current decline in music sales, any more than cassettes were in 1978. Yet the music industry, through its agents and trade groups, has launched a vicious campaign of propaganda and lawsuits against our industry.
They have sent with hundreds of bogus copyright claims sent to ISPs nationwide. They have put a series of Internet companies out of business, and are now in the courts seeking to summarily close others. They have filed suits against the largest ISPs in the nation, and today are preparing to go to court against Verizon in an effort to expand their ''digital rights'' against the interests of consumers.
They are demanding that ISPs terminate subscribers' Internet accounts at their whim—without first filing any lawsuit against the consumer—and are demanding that the Department of Justice prosecute consumers who use peer-to-peer networks.
Today they are before this committee in an effort to blame their decline in sales on the Internet. But this is a hollow claim that is not substantiated either by the facts or by reason.
The music industry's financial slump is more likely due to the fact that they have raised the price of CDs by 13% in the past two years, in the middle of a major economic downturn that has impacted overall retail sales and sales of consumer electronic products to a much greater degree than the music industry. The decline in sales is also likely due to the fact that they are suffering from a dearth of new talent. And that the industry has been unwilling or unable to offer any type of digital music distribution model of its own.
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The music industry is also suffering because it failed to see a major shift in consumer buying habits. The mass-production, mass-advertising and mass-consumption model that has directed American buying habits since the days of Henry Ford have evolved to a new model in which consumers have things their way—how they want it, when they want it, and where they want it. The popularity of file sharing is at its root a signal to the music industry that it is time to rethink their products, packaging and distribution—or face becoming obsolete.
LEGISLATIVE SOLUTIONS
Mr. Chairman, and members of this committee, the problems faced by the music industry were not caused by the Internet and cannot be resolved by any amount of legislation. They are problems created by the industry itself, and the wounds they are suffering are self-inflicted.
It is our belief that the Internet, and the sharing of files over peer-to-peer networks on the Internet, will ultimately evolve into a powerful new market for content holders. Already, an estimated 40 million Americans are engaged in file sharing, and that number will only increase. These consumers are not unwilling to pay for content. They are unwilling to pay for content they do not want, or content that is packaged in a way that is difficult for them to use.
This is an issue that industry can solve. It does not require new legislation. It does not require new powers of enforcement or interdiction. It requires only that the content community and the Internet community continue their productive dialogue toward building a digital distribution model for their products. These two industries, working in concert, have the necessary expertise, resources and incentive to resolve this issue and should be given the opportunity to do so. Crafting this solution will involve a delicate balancing of interests that may at some point be assisted by appropriate legislation, but needs no such assistance now.
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The Congress, and this committee, can best serve the needs of American consumers and of the industries involved by allowing this dialogue and the search for industry resolutions to continue unimpeded.
Thank you.
Attachments:
Slate—''The Music Industry's Self-Inflicted Wounds''
Reuters—''Study Faults Media Focus On Copyright Strategy''
Janis Ian—''The Internet Debalce—An Alternative View''
Janis Ian—''Fallout''
PREPARED STATEMENT OF THE NATIONAL MUSIC PUBLISHERS' ASSOCIATION
On September 26, 2002, the Subcommittee held a hearing ''Piracy Of Intellectual Property On Peer-to-Peer Networks, in which H.R. 5211, the Peer-to-Peer Piracy Prevention Act was discussed at length. The National Music Publishers' Association (NMPA) appreciates this opportunity to submit written comments on this important subject.
NMPA works to protect and advance the interests of the music publishing industry. With more than 800 members, NMPA represents the leading companies in the industry, from those affiliated with large media companies to the industry's largest and most influential independent music publishers The Harry Fox Agency, NMPA's licensing affiliate, provides an information source, clearinghouse, and monitoring service for licensing music copyrights and acts as licensing agent for more than 27,000 music publisher-principals, who in turn represent more than 160,000 songwriters.
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NMPA applauds the subcommittee for focusing on the pressing problem of peer-to-peer piracy. As evidenced by the Napster litigation, peer-to-peer piracy has since its inception posed a serious threat to music copyright. The International Federation of the Phonographic Industry (IFPI) observed that the U.S. music sales market experienced a 9.4% decline in 2001, with Internet infringement and CD burning two of the principle responsible factors. In the year 2000, international enforcement actions taken by IFPI and its 46 national affiliates led to 15,000 websites containing 300,000 files being taken down. There is no question that illegal file-sharing is a substantial portion of the digital infringement problem. In November of 2001, NMPA and several songwriters filed a class-action copyright-infringement suit in Los Angeles against the operators of the Morpehus, Grokster and KaZaA file-sharing systems, following a suit in October of that year by the Recording Industry Association of America and the Motion Picture Association of America. A positive decision was recently obtained against the Aimster system, while the litigation against Morpheus, Grokster and KaZaA is still pending. The substantial problems of peer-to-peer piracy remain. The attention of the subcommittee to the serious nature of this problem is therefore greatly appreciated.
H.R. 5211 would authorize copyright owners to utilize technological self-help measures to prevent unauthorized distribution of copyrighted works over peer-to-peer networks. The authorization is meant to relieve copyright owners from the specter of liability under certain common law doctrines and state and federal statutes, including the federal Computer Fraud and Abuse Act, when they use self-help measures such as interdiction, decoy, redirection, spoofing and file-blocking. At the same time, it provides a new federal cause of action against copyright owners who abuse their right to use self-help measures. NMPA supports the legislation's laudable goals of protecting the use of reasonable measures by copyright owners. At the same time, NMPA would like to see certain clarifications and modifications to the bill.
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NMPA's first issue relates to the preemptive effect of the bill. As currently written, the bill preempts causes of action under state laws only when the copyright owner's self-help actions are in compliance with the standards of the bill. If a copyright owner unknowingly exceeds the boundaries of H.R. 5211 and causes, for example, $300 worth of damage to computer files or data, the copyright owner could be sued under state laws that may have very different (and much lower) substantive standards for finding a violation, and very different (and much higher) potential for damage awards. For example, simply imposing a burden on the finite capacity of a computer has been found to be sufficient damage under some state law theories. In the context of spamming and misleading advertising, such a rule may be reasonable, but the rule has not been clearly limited to those types of behavior. Even if the copyright owner prevails, which we believe is a distinct possibility, the burden and expense of state litigation will have been borne—which we believe is unfair and unnecessary in this situation.
NMPA believes that a more appropriate and customary approach to preemption would be for the federal law to preempt state laws in all instances. Such an approach is supported by the fact that peer-to-peer networks and the communications over them are by their nature interstate. Accordingly, a single federal cause of action with an appropriate remedy that balances the interests of those concerned is preferred to a patchwork of potentially inconsistent and inappropriate state laws.
The fact that the subject of the bill is copyright law also argues in favor of a single federal law that broadly preempts state causes of action and remedies. The basis for copyright statutes lies in the U.S. Constitution. Section 301 of the Copyright Act preempts state laws that are equivalent to copyright, thus limiting the rights of those who create intellectual property. It would be unfair to deprive copyright owners of the benefit of state laws while providing those who infringe on federal copyrights the ability to use state laws against copyright owners.
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Although not strictly an issue of preemption, the preference for a single cause of action also means that the bill should be clear that no cause of action exists under the Federal Computer Fraud and Abuse Act against copyright owners who seek to protect their rights under federal copyright law by engaging in interdiction, decoy, redirection, spoofing and file-blocking. The federal courts have given the CFAA a broad reading, finding ''damage'' to computer files or data to include any impairment of the integrity or availability of computer programs or data. One court has found ''impairment'' to occur when a large volume of unsolicited bulk email causes slowdowns or diminishes the capacity of a service provider. Under this reading, it is possible that some of the legitimate anti-P2P piracy techniques—including decoy, redirection and spoofing—could result in slowing down the computer of the file trader, in which case a claim under the CFAA might be brought. As noted with state causes of action, while the copyright owner may prevail under the CFAA, it will have borne the burden and expense of additional litigation. The CFAA should therefore be superseded by H.R. 5211 when copyright owners engage in legitimate anti-piracy efforts under the bill.
The second point of concern to NMPA is the notice requirement. The present draft of the bill requires that the copyright owner give notice to the Department of Justice of ''the specific technologies the copyright owner intends to use to impair the unauthorized distribution, display, performance, or reproduction of the owner's copyrighted works over a publicly accessible peer-to-peer file trading network''. It is somewhat unclear whether this notice must be given every time that a particular technology is to be used, or only the first time. We encourage clarification that the notice is required only upon the first use of a technology.
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Third, NMPA would like to address what has been characterized as a ''safe harbor'' provision in the bill. The nature of a safe harbor is that a potential defendant should be assured that its actions will not expose it to liability if it complies with an objective, mechanical bright-line test of unambiguous requirements that exempt it from the a prima facie cause of action under the statute in question. Subsection (c) of the bill,—which states that ''A copyright owner shall not be liable under subsection (a) for an act to which subsection (a) applies'' if the copyright owner complies with the provisions regarding notice to the Department of Justice and the affected file trader—has been presented as a safe harbor. Subsection (a) of the bill, however, states that the copyright owner shall not be liable if its actions do not ''alter, delete, or otherwise impair the integrity of any computer file or data residing on the computer of a file trader''. Thus, the cross-reference to subsection (a) that appears in subsection (c) appears to provide that notice to the Department of Justice and the affected file trader is not sufficient to bring the copyright owner within the protection of the safe harbor. Rather, the safe harbor only applies if the notification requirements are met and the act of the copyright owner does not alter, delete, or otherwise impair the integrity of any computer file or data residing on the computer of a file trader. This is not a standard safe harbor, since it effectively says that the copyright owner will not be liable for causing harm if it does not cause harm.
Simply satisfying the notification requirements should be sufficient to put the copyright owner within the safe harbor, unless it can be shown that the copyright owner intended that harm to computer files or data would result. This formulation of the safe harbor would promote the filing of notice, provide the Department of Justice with information about the various self-help technologies being used, protect copyright owners from liability if unintentional or unforeseen harm to a computer file results, but deny protection to copyright owners that knowingly or intentionally cause harm to computer files or data. We believe this strikes the proper public policy balance.
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NMPA's comments should be viewed within the context of its overall support for the intent of this legislation, which addresses one of the most profound and serious threats today to the rights of copyright owners. NMPA appreciates the subcommittee's efforts in this area and looks forward to continued participation in the consideration of this issue and this particular piece of legislation. Thank you for this opportunity to express our views.
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PREPARED STATEMENT OF STEVE GRIFFIN
What is peer-to-peer? What are its uses? Who uses peer-to-peer? What kind of company is StreamCast Networks? What kind of company was Napster? These are important questions and the answers need to be understood by Members thinking about legislating in an area that impacts their constituents and peer-to-peer. Considering that no true technology companies or interests are present at the hearing—it is clear that there is not an understanding of peer-to-peer. Without an idea of what the technology does, a premature, incorrect assumption may be growing on the Hill that all peer-to-peer software and technology is destined to be enjoined by the Courts (i.e., they improperly only think of the now defunct Napster or Aimster when completely different Peer-to-Peer software tools exist). It is as if Members categorically presume innovative peer-to-peer products are illegal despite such software products' respective uniqueness; this notwithstanding the fact that such a determination has not been established in a court of law in proceedings currently pending regarding decentralized peer-to-peer technologies. The challenge today is overcome the scare tactics and resist creating a temporary or shortsighted fix that is neither in the best interest of the public or in favor of the innovation of technology.
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What I have found in the many years in business and 27 years of marriage is that the most important action to overcoming challenges is working together to find common ground. Rather than fighting, suing and hacking like the content industry is doing, I am spending my energy trying to find solutions that benefit everyone including content creators, content owners, consumers and content communicators. The solution will only come when all the stakeholders sit down together in effort to attempt to reach a reasonable, workable resolution to the on-going battle between content and technology.
WHAT IS PEER-TO-PEER?
Peer-to-Peer, commonly referred to as ''P2P'', is a communications model in which each party has the same capabilities and either party can initiate a communication session. In some cases, peer-to-peer communications is implemented by giving each communication node, otherwise known as a user, both server and client capabilities. In recent usage, peer-to-peer has come to describe applications in which users can use the Internet to exchange files with each other directly or through a mediating server.
WHAT IS PEER-TO-PEER TECHNOLOGY?
Collaborative computing, also known as distributed computing, pools the processing power of multiple computers. Instant messaging applications like Morpheus Messenger, MSN Messenger and AOL Instant Messenger, allow users to swap messages and files synchronously. This allows people to use shared space in which they interact directly without dealing with servers and boundaries, doing things such as collaborating on documents in a shared space and searching each others' computers and shared folders, also called file sharing.
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WHAT IS PEER-TO-PEER SOFTWARE?
A true P2P software product, like Morpheus, allows consumers to connect directly with each other and to exchange any type of information—anything—recipes, family photographs, a poem from a budding poet, commentary on public issues, anything. Once consumers have downloaded the Morpheus software they choose what electronic information that they want to make available to people around the world. In short, Morpheus allows consumers to directly connect to each other like the Internet was intended to be—a communication tool where users are both senders and receivers of information. It is a new gateway or alternative to the World Wide Web where users have primarily been only receivers of data (i.e., visiting a company's website to obtain information on that company provided to the site visitor by that company).
P2P'S BENEFITS INCLUDE, BUT ARE NOT LIMITED TO:
1. Businesses worldwide can save billions by using distributed computing setups that take advantage of unused bandwidth and resources.
2. P2P knocks down the barriers to publishing, communicating and sharing information.
3. P2P permits easier access to all types of data, files and information.
4. P2P provides content creators with a venue to communicate and share ideas and information directly.
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SOCIETAL IMPACT OF PEER-TO-PEER
The reason that I am so passionate about the Peer-to-Peer technology platform is that it not only can lead to important societal changes but also itself reflects important societal changes that have already taken place. Individuals—on their own, unaided by the communications giants—are finding their own new ways of connecting, of communicating, and of creating and controlling their own communication channels. Their will—connected and empowered—is prevailing now and Congress should not overlook them.
The old Internet, or the way that it has been since 1996, was and remains a distribution channel that has been controlled by traditional companies where users were primarily receivers of information. With the ''New Internet'' consumers are not merely receivers of information, they are also senders. StreamCast Networks is committed to incorporating different tools that empower consumers to communicate and exchange information directly with one another.
USERS OF PEER-TO-PEER TECHNOLOGY
The Morpheus software program is a communication tool that allows users to independently connect to one another to form a user network, commonly known as a user-to-user or ''peer-to-peer'' network. Using Peer-to-Peer networking functionality of the software, users may search for and compare any kind of computer file, including text, images, audio, video, and software files with other computer users running similar networking software. With Peer-to-Peer software such as Morpheus, the searching and file-sharing functions are entirely decentralized—after downloading and installing the Morpheus software on their computers, users decide for themselves what information to seek out, send and receive with the software, without any further involvement from StreamCast.
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Something that needs to be understood by the Members is that contrary to what has been incorrectly depicted in some media reports or by major motion picture companies and major recording labels, Morpheus is not the same as Napster nor does the Morpheus software work the same way Napster's service operated. Napster provided a service that directly helped its users find specific copyrighted songs. StreamCast provides no such service, but merely provides a Peer-to-Peer software tool called Morpheus that permits users of the software to connect directly and form a decentralized user network. In contrast to Napster, StreamCast does not operate any user network, and it does not operate a file-indexing service. Users of the Morpheus software program take advantage of the program's full file-sharing functionality without StreamCast's continued involvement. Users join the user network, select which files to share, send and receive searches, and download files, all without the involvement of StreamCast.
TECHNOLOGICAL INNOVATION AND THE BENEFITS OF P2P TECHNOLOGY
Unlike the media-conglomerates, consumers are not resisting change; they are encouraging and embracing it. They are clear about wanting commercial content available and wanting to create content to share as well as wanting a broadband connection. Like e-mail products before it, Peer-to-Peer communication tools are likely to drive the next wave of technology buying in the home and office.
The rise of Peer-to-Peer networking is part of a long-standing historical trend in technological innovation: the migration of ever-more powerful publishing tools in the hands of individuals. The trend has been driven of obvious marketplace demand and individuals desire for tools that enable creation, reproduction and distribution of information.
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There is little debate that consumers around the world represent an incredible opportunity to release creative expression. Decentralized P2P offers the most cost effective and efficient distribution platform that exists today. By leveraging millions of consumers' computers and their distributed bandwidth, enormous cost of goods savings are realized. For instance, when consumers launch the Morpheus P2P software, they join and help create a self-organizing, self-sustaining network of users around the world. The more users that join the network and share content, the richer the experience is for everyone.
Consumer demand has spurred technological innovation that has delivered enormous benefits, both for society at large and copyright holders. Virtually every American has enjoyed the benefits brought by the audio-cassette recorder, the photocopier, the VCR, the personal computer, and the Internet. The copyright industries, meanwhile, have seen the size of their own markets, as well as the value of their content libraries, increase in part due to the new markets opened up by these new consumer technologies. Over the last century, new technologies and copyrighted works have been complementary—advances in the former have, over time, invariably increased the value of the latter.
Bearing in mind the enormous benefits of P2P available now and in the future, I urge you to consider the new threat to consumer's freedom and privacy, as well as to the future of the Internet. Technology issues are difficult to get ones hands around, believe me as a CEO trying to make a new species of business work I understand the complexity of the situation the Committee is in. On one side you are being asked by multi-national media conglomerates to control consumer behavior and their use of various products and information like computers, personal listening devices and stereos. Rather than provide the consumer with a reasonable solution to consumer demand, the media companies have decided to sue the consumer directly arguably to force them 'back into line'' as well as have requested Congress give them the ability to hack computers used by their consumers who use Peer-to-Peer software products. Then on the other side are innovative technology companies that are creating technologies that need time to mature and be adopted by the mainstream public. Let's not forget the driving force of this unfortunate battle between content owners and technology companies, the consumers, who are caught in the crossfire.
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THE HISTORY OF THE BATTLE BETWEEN TECHNOLOGY AND CONTENT
The battle over technology vs. content is nothing new. While it is natural to resist change, it is necessary for growth.
History proves to be a valuable teacher. The content industries have repeatedly tried to repress new technologies. By way of example, piano rolls, radios, cassette recorders, VCRs, Digital Audio Tape, MP3 players, cable television, in-room video, and Replay TV were each met with content industries' pessimistic pronouncements of gloom and doom and efforts to outlaw them. Fortunately, Courts have been reluctant to grant copyright owners the power to prevent technological innovation in order to gain control over their copyrights. Likewise Congress should continue to refrain from granting copyright owners the power to stifle new technologies. History proves that such technological innovations have not only made America and the world a better place, but have made the content industries and copyright holders richer too.
This ongoing battle is best described in relation to the Betamax lawsuit in the 1980s in which two movie studios filed a lawsuit hoping to stop the manufacturing and distribution of Sony Betamax VCRs.
At the time, Jack Valenti, who heads the Motion Picture Association of America, went so far as to declare, ''the VCR is to the American film producer and the American public as the Boston Strangler is to the woman home alone.'' Fortunately for consumers and businesses alike, the Supreme Court of the United States sided with Sony. Not only did the sales of VCR boom, but also a flood of new revenue streams for Hollywood was created.
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In the 1940s, when radio was still considered a technological innovation by many American consumers, copyright holders were not being paid but consumers were nonetheless able to enjoy music for free. This technology first was used in homes and offices and eventually migrated to a mobile device, the automobile—a migration not too different from digital music's route from desktops to MP3 players.
Congress might have responded as Congressman Berman now suggests by allowing the copyright holders to attack the owners and users of radios. They could have passed a law that allows copyright holders to interdict, redirect, decoy, spoof, and signal-block or jam the radio airwaves preventing music from reaching consumers' radios.
Fortunately, no such law was passed.
Had Congress permitted content owners to block or otherwise sabotage radio airwaves, radio might not exist as we know it today. In this situation, a very direct correlation exists where you as elected representatives can determine a successful outcome of the struggle for content owners trying to keep up with the pace of technological innovation.
Congress has repeatedly stepped in to arbitrate between new technologies and copyright law. On some occasions, Congress has created compulsory licenses to mediate the tension. On other occasions, Congress has resisted entirely the demands of the copyright industries for control over new technologies. Today, there is no more cause to curb peer-to-peer technology in the name of preventing so-called ''piracy'' than there was to stop the VCR or radio.
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CURRENT PROPOSALS
The legislative proposals on the table clearly do not have the consumer or the majority of content creators in mind and are neither reasonable nor workable.
Senator Fritz Hollings introduced legislation along with five cosponsors on March 21, 2002. The Consumer Broadband and Digital Television Promotion Act is a bill to regulate interstate commerce in certain devices by providing for private sector development of technological protection measures to be implemented and enforced by Federal regulations to protect digital content and promote broadband as well as the transition to digital television, and for other purposes. Because it essentially mandates that hardware be built according to the terms of multinational media companies instead of the technology companies creating the product to meet consumer demands, Senator Hollings' proposal would be devastating to the future of innovation and entrepreneurship around the world.
Over the past several months, multiple news services have reported that major record labels have launched an aggressive new guerrilla assault on the file-sharing networks by flooding online sharing networks with bogus copies of popular songs. Yet, it appears that Hollywood recognizes that such tactics may run afoul of state and federal laws, requesting that Congressman Howard Berman (D-CA) introduce legislation that would legalize their illegal actions.
H.R. 5211 allows copyright owners to employ the methods of hackers such as interdiction, redirection, decoys, spoofing, and file-blocking. It not only proposes granting copyright owners a 'safe harbor' from current state and federal laws, but also essentially makes copyright owners the proverbial 'long arm of the law' to self-enforce rules set by the government without meaningful remedy for abuse of the rights requested in the legislation.
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It is interesting that Congressman Berman has chosen the end of session to introduce H.R. 5211 which would hobble a technology at the same time saying, ''. . . P2P represents an efficient method of information transfer and supports a variety of legitimate business models. Removal of all P2P networks would stifle innovation.'' Further, it is at a time when analysts such as Josh Bernoff at Forester Research report that ''[T]here is no denying that times are tough for the music business, but not because of downloading''.
It appears that a goal of the content industries who support The Consumer Broadband and Digital Television Promotion Act and/or Congressman Berman's H.R. 5211 is simply to prevent the development of any technology—including the Internet—that is not designed or organized to maximize their own profits or to control so-called, ''piracy''; this despite the fact that history has consistently shown that suppression of technology is shortsighted.
It is important to remember that the content industries do not represent all copyright holders or the public interest. Clearly, content industries desire laws to maximize their profits and without regard to how the public and other industries may be affected. Furthermore, to give one industry, namely the multi-media conglomerates, no matter how large and well-funded, the power to control innovation that affects countless other industries, would undermine the free flow of commerce that has brought the U.S. all the fruits of technological innovation.
CONCLUSION
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StreamCast believes that there is an array of reasonable solutions to the battle between the content industry and the technology industry over such issues as Peer-to-Peer technology and use. Rather than adopt shortsighted, nonsensical, and overreaching laws like the ones suggested by Congressman Berman and Senator Hollings, Congress should facilitate a dialogue between the stakeholders in an effort to reach a reasonable, workable solution to these very important issues. If this fails to happen, the ordinary citizen, the consumer, is the one who will ultimately lose.
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PREPARED STATEMENT OF STEPHEN HINKLE
I bring this testimony to the aid of three file sharing services, and their parent companies, MusicCity, KaZaa, and Grokster.
My name is Stephen Hinkle, and I currently work as a Network Tech for the City Heights Educational Pilot. The CHEP is an educational program in City Heights that works with some inner-city schools. I am also a computer science student at San Diego State University.
I have been following this ''internet music crisis'' for a couple of years now. Every since the Recording Industry Association of America (RIAA) sued Napster, I was interested in following it. I have then written several articles for Boycott-RIAA.com, a site about the ''bad acts'' of the music industry and their effect on artists and consumers.
As a consumer, a student, and a representative for the educational community, I have deep concerns that the RIAA, MPAA, and NMPA collaborating to try to shut down file sharing services will hurt the economy, emerging artists, consumers ''fair use rights'', and will hinder music distribution in cyberspace.
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History of File Sharing Cases:
The RIAA first sued Napster, then Scour, then Aimster [now called Madster], and now MusicCity, KaZaa, and Grokster, and finally AudioGalaxy. In my opinion, the intent of these lawsuits was to bankrupt the file sharing companies, not to ever be ''fairly tried'' by jury.
For example, the plaintiffs in the AudioGalaxy case asked for over 100 million in damages. In the Scour case, the stakes were much higher, at 250 Billion. It seems like very few, if any business could pay such exorbitant amounts. Some of the people who operated the services got sued personally, which means that their own family could be in debt for life.
In my opinion, and others I talked to, and from articles I have read, I believe that file sharing has substantial non-infringing uses, allows consumer ''fair use'', and can be an excellent content distribution medium.
How File Sharing is good for Content Creators:
Many musicians claim that file sharing actually helps them in music business. Many indie and major label artists think that file sharing is actually good, because it gives people a chance to hear their music, who would not hear it on the radio. Artists from BB King, Courtney Love, Janis Ian, Dave Matthews Band, Lara Lavi, The Rosenbergs, and many others say that ''file sharing'' has helped promote them, including sharing on the Morpheus, KaZaa, and Grokster networks.
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Major and independent label musicians have a lot to gain from P2P sharing, even if it is not financially. Many people that I talked to told me that they have bought more CDs as the result of getting to hear what they are buying first.
A lot of bands want to use MP3 downloads for promotion, but the labels do not allow them to on their own web sites, and many have to turn to file sharing networks to do so. This is because the labels often make the artists sign their rights away. I know a lot of unsigned bands are beginning to use P2P companies to get their music known. The best-known program was Napster's New Artist Program, before Napster went under. Now, others have taken over this task, including Streamcast Networks, by featuring new artists on their Morpheus service. Another example is Grokster's partnership with GigAmerica, which features unsigned bands. Centerspan also allows unknown bands to be featured on their Scour service, as well as Universal's Emusic.
In addition to music, there are other good uses for P2P. Reelmind, the independent film organization, partnered with Grokster to promote its films on the Grokster P2P network. Other uses include photographs, cooking recipes, and efficient distribution of public domain or open source software.
Consumer's common uses of P2P:
The number one use of P2P by most consumers is to download media files (music, video, etc), and to Discover New Music. Most consumers like a much bigger variety of media, than just what the RIAA and MPAA want people to hear or see. I have talked to many people on their uses of P2P, below are common things I have heard from them.
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In these days of high costs of living, many consumers are budget-savvy, and want to decide if something is worth buying. Many people, especially college students do not have too much money to waste on ''bad CDs'', or CDs that are not worth their money. So, they download a few songs off the CD, to see if it is worth their money. Many adults end up buying more CDs, by sampling first.
The next common P2P use by consumers is to download songs they already own because it is easier to download a song, than it is to ''rip'' it for their CD. This should be a ''fair use'', since the consumer already owns the material. Many people do this for their computers in another room, at their office, or for their portable digital music players (often called MP3 Players, since MP3 is the most common format for compressed digital music).
For many consumers who burn Audio CDs, they do not burn entire albums downloaded from P2P systems. Instead, they burn ''custom collections''. A custom collection is a selection of songs from many different artists or albums on the same CD. For example, if one wanted one song by Alicia Keys, another by Bob Dylan, another by Dixie Chicks, another by Mandy Moore, on the same CD, it would be a ''custom collection''.
The next reason that people use P2P is to obtain music, movies, or other content that is no longer sold in stores. For example, my mom could not find ''White Bird'' by ''It's a Beautiful Day'', and she remembers it from her childhood. However, I punched it into Napster, and it was there! Many people use P2P for this, is because more than 60% of the music catalog of the labels is not sold at any given time. In my opinion, there is no cost to anyone, if the song or other content is no longer available anywhere else.
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For most video P2P users, they download TV shows they missed, or movies that they want to see if it is worth paying the high price of movie tickets for. Since the price of a movie ticket in San Diego (where I live), is about $9.00 per person, an that does not include Popcorn, Drinks, or other stuff you get at the movies, it is worth using P2P to ''sample a movie'' before you go see it. People will download clips of movies, or even an entire movie from a P2P service to see it is worth seeing on the big screen.
Most video files are huge (between 650MB and 3GB for a two-hour film), and downloading one can take a lot of time (over 6 Hours on a Cable Modem), especially if the other P2P user has a slow uplink (most cable and DSL connections uplink much slower than they downlink). Since the space is so large, many users delete them shortly after they are played. Even if they get burned to CD for permanent storage, the quality is usually nowhere near broadcast or cinema.
For other content, some people said they download Software, books, and the like. Many users who do this are low income, and many people told me that they would buy a copy, if they could do so. Also, many people download ''free'' software, which is software licensed for open source distribution. Linux is one example of this.
Consumer reactions to legal actions against P2P:
Many consumers were upset when P2P companies such as Napster and Scour got sued. Many consumers loved the fact that they could get easy access to a vast library of media. The selection offered was better than any record or video store on the planet. When the injunction that ordered Napster to be shut down, consumers began to hate the music industry, and when the artists came out on how their labels cheated them out of being paid from their CDs, people no longer wanted to support the industry's side.
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When the RIAA started threatening college campuses to block access to P2P in their dormitories, it made many college kids upset. In response to these attacks, P2P developers worked to make their network harder to block or shut down. Also, it made a lot of college kids not want to buy the CDs of the company that did this. At San Diego State University, who instituted the blocking with Packeteer (a company who markets filtering for P2P sharing), now use all sorts of tricks to get around the block, such as running Gnutella clients, and share within the dorm network, and use hard to block programs P2P like Filetopia 3.0 (which combines Random Ports, Decentralization, and High-Bit Encryption).
Many consumers now feel that their data is at risk, with the event of the Howard Berman Bill, which would legalize some P2P hacking attacks, and Denial-of-Service attacks against consumers. Many tech-savvy consumers say that this is taking things too far. The Electronic Frontier Foundation, Boycott-RIAA.com, and DigitalConsumer.org, report that consumers' privacy is at risk, as well as their constitutional rights. I believe this too, and that is one reason I am writing this testimony. This prompted Information Wave Technologies to block the RIAA and its ''hired spies'' from accessing its network.
With the P2P lawsuits, consumers and artists alike began to question the music industries practices of greed, and many of them are getting heavily exposed. Many consumers and artists are appalled that artists can sell millions of records and make nothing off of them. As such, coalitions such as the Recording Artists Coalition, Digital Consumer, Future of Music, and others were formed.
Consumers are upset and more concerned, by the music and movie industries trying to mandate Digital Rights Management technology (DRM) in almost every electronic device. This would seriously limit what ways that one could use a computer, and even give them ''unfair competition'' because their definition of ''unauthorized'' would include everything not owned by their oligopoly. Independent musicians, software writers, filmmakers, and the like should be able to distribute content in unprotected format if they choose. Licenses like the GNU General Public License, the Open Audio License, and others are designed to specifically allow distribution.
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The proposed CBDPTA bill, that Senator Fritz Hollings wrote would ban even e-mailing a friend a word document, or being able to turn in a program you created for a programming class. As a member of the academic community, with the use of distance education becoming more common, this bill would kill it. Consumers are upset that the RIAA and MPAAs attempt to ban a technology, just because it could be used for infringing copies. History has shown that every technology the entertainment industry has been afraid of has benefited them. This has been true with tapes, CDs, VCRs, MP3 Players, DAT Recorders, and the like.
Many consumers are worried that the industry is lobbying to take away the rights to copy ANY digital medium, and that the industry is taking their ''fair use'' rights away. Fair use rights include ''space shifting'' (to move data from one medium to another, or to another room in their home, or to their car, etc), ''time shifting'' (to record a broadcast and play it back later), ''quoting'' (to use a small sample for speech or academic projects), and ''reverse engineering'' (to figure out how a device works, to make something compatible with a device or format (such as emulation or interoperability).
The entertainment industry has sued literally every device maker, claiming that every new feature is ''copyright infringement'', and some under the Digital Millennium Copyright Act (DMCA). For example, the RIAA tried to stop the sale of MP3 players. The MPAA are trying to stop the sale of ReplayTV recorders because they can send shows to other units, and skip commercials. The same happened with DeCSS and the Advanced E-Book Processor from Elcomsoft. These devices have ''fair uses'', even if the consumer can make a digital copy with no quality degradation. One such example is to open an e-book on a Macintosh or Linux computer.
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Lets face it, just because a device can allow the consumer to make a perfect copy does not mean it should be banned. If that were true, the photocopier should be banned too! If one puts money, or a government document into a color copier, this does not stop it from copying it, doesn't it? Plus, there is nothing in the copyright law that says that a consumer made copy has to be lower in quality than the original. It is a common industry myth that this is true, but it is not. A ''fair use copy'' can be in perfect, digital, form. The consumers are infuriated, and they do not want to buy the products of the people putting out this propaganda.
How the labels pay subscription services are no comparison to the content and catalog offered on most Peer-to-Peer systems today:
First of all, the catalog of content offered on the labels sites (such as MusicNet, PressPlay, FullAudio, and Rhapsody) is no comparison to the catalogs of P2P systems like KaZaa, Gnutella, Blubster, and Morpheus. In addition, many ''licensed'' services have tracks just from a few labels, and just selected tracks from those labels. Many people, who use the ''licensed'' services, have to subscribe to many different services to get the music they want.
Next, many ''licensed'' services use encrypted file formats, which make the files unusable with many media player programs, CD burning programs, portable player device and many non-windows operating systems (such as Mac OS, Linux, BeOS, Lindows, Unix, etc). Often, the formats of the licensed services are specific to a service, and the user cannot organize all their tracks easily. For example, MusicNet uses RealAudio format, which means you must use the Realone player to play your tracks, and it offers tracks from BMG, EMI, Warner Bros, and Zomba. Next, you also realized you want some Willie Nelson, which is on Universal. You then subscribe to PressPlay, and find out that your Realplayer cannot play the tracks, and you must now use Windows Media Player. Now, you learn that you have to subscribe to TWO services, and have to use TWO different media players, so you cannot play one after another in a play list, since the files are incompatible.
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However, if the same user were to download LimeWire, Morpheus, or KaZaa, they would have found the same musical groups in a format (most likely MP3 or OGG), which many media players can play. It is more of a ''one stop'' place to find the content they want.
Many label owned services usually limit the bit rate that files can be downloaded it. Most label owned services offer between 64K and 160K bits per second. Most P2P systems offer higher bit rates, which means the sound from the files is generally better. It is not uncommon to find files ranging from 128K to 320K on LimeWire and Grokster.
Next of all, most people who download expect to be able to use the files they download on their portable players. Like I have said above, most people want to download the music they have and use it on their portable player. Many people prefer to download than ''rip'', because it is easier. Most label-owned services offer little or no ripping capability. Even porting of MPEG video to portable devices is becoming more common. Most Laptop computers will play MPEG videos. Archos is making a handheld device that can play MPEG, and other video files. People often take portable devices in cars, airplanes, to the office, jogging and other places, because they can hold a lot of music and other content, and are easy to use.
I, and other people I have talked to, are dissatisfied with the security (copy protection) of most label owned music sites, because it impairs the users ability to make a backup copy of their downloads. Consumers should have the right to backup their paid-for downloaded content to floppy disks, Data CDs, Zip Disks, Tape Drive, RAID Drives, Network Backup Systems, and other media, and be able to restore it without wasting a license, or the content becoming unusable after the restore.
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This ''anti-copy'' technology also has other drawbacks. You are not allowed to ''move'' the content you legally have the rights to play to another computer (such as your laptop, or when you upgrade, and the like. It also prevents many Macintosh and Linux computers from even being able to play it. For users at work, and the like where their ''My Music'' folders are stored on the network server (such as with Windows/Novell/Linux domain controllers), it disables them almost instantly, because of the syncing involved.
Consumers want to be able to keep the content they download. Most pay services have the content ''self destruct'' after a set number of days, becoming a non-subscriber, or after a set number of plays. Most P2P systems offer ''unlimited play'' content. Many people I know are proud of their digital libraries, and do not want to have to pay more fees to play their content down the road, especially users with slow modems.
Last of all, many people expect to be able to CD/DVD burn the music or movies they download. People have expected this since Napster, and they will continue to do so. Most people are likely to pay for ''newfangled'' stuff, not ''limited use'' stuff.
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How P2P is not a ''Company Controllable Medium'':
Peer-to-Peer means in reality ''consumer to consumer, with no middleman. In many of today's P2P networks, there is not any company responsible for the content. In a P2P system, you are dealing with 3 separate ''entities'', the software creator (who creates the actual P2P software program), the directory system (which inventories the files of the various computers sharing data), and then the nodes (which are the actual computers sharing data with each other), many of which can be individuals, companies, or automated functions.
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In Centralized P2P systems, the directory system is usually run by a company or individual, where all the nodes connect to a central server, and the central server ''catalogs'' what files the users are sharing. This medium is easily controllable for copyright infringement, because blocking can be installed. Napsters, Opennap, Scour, are examples of this system. Below, shows the model of a centralized P2P system:
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With the response to the Napster and Scour lawsuits, most P2P systems are decentralized these days. This means that all the nodes do not go through a central server. Instead, the directory system, either involves sequential broadcasting (as in Gnutella, LimeWire, Blubster, etc), or ''Supernode Hubs'' (as in KaZaa and Grokster). This means that the directory, uploads, and downloads are all done without the use of a central login server. This results in a total disconnection from the system developers and the users. Often every node is a client, server, and a directory station. The computers connect directly with each other, without a central point.
When most people launch a decentralized P2P client, it tries to connect a list of hosts (i.e. other computers running the same piece of software at the same time), till it finds one. This ''list of hosts'' is stored locally on the user's computer. Sometimes servers or other hosts store lists of hosts, and searches come through to them. Once a few hosts are found, and the user is connected he/she can search for content. If a host is not found, the user in many cases can manually enter the IP address and port of another user.
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When a search query, is executed, the computer sends it to his/her connected hosts. If anything is found in their shared folder, it is sent back. It then broadcasts the query to any other hosts those hosts are connected to. This continues many levels deep. Since many computers are connected to different hosts, the search continues.
When one chooses a file from a search that he/she wants, the hosting computer is told to upload a copy of it to the computer that requested it. One the next page, there is a diagram of a decentralized system.
A Network diagram of a decentralized P2P system:
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This decentralized design means that ''spying'', monitoring users conduct, censoring copyrighted content, and the like nearly impossible. Since there is no company or government ''middleman'', these networks are almost unstoppable. A lawsuit would be useless in stopping this kind of network. As you can see from the diagram, there is no one node that can turn all the other nodes off. These networks are very fault tolerant.
With some networks (such as Nucleus and giFT), having open source code, it means that the creators are individuals, not companies. This means that they probably do not have $150,000 for each work infringed on their networks, for files they did not share themselves. Even if the creators of a network go bankrupt, the software loaded on client hard drives will still work. This means that these networks have the potential to work almost forever, and they should be used to their biggest advantage.
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Compensating Creators in a Peer-to-Peer world:
Since copyright is not always enforceable in a peer-to-peer world, there are various approaches to compensate artists and other content creators for their work downloaded on P2P networks. The music and movie industries are concerned that artists, and producers will never be paid, and P2P results in ''theft'' of their content. They also claim that it bypasses their ''monopoly distribution control''.
Many content creators need to make a living. An artist's job is to perform music. A songwriter's job is to create songs. TV-Show producers and movie producers deserve to be paid for their work. There are many ways to compensate the creators in a P2P world. Many of the schemes would even work on an open source, decentralized system.
For centralized systems, the easiest way is to license content to the P2P company, and charge for access, or sells banner or pop-up ads. SongSpy, and Scour are doing this now. Right now, it is hard for independent companies (i.e. not owned by RIAA or MPAA member companies) to get licenses for major label music. In addition, the Musicnet/PressPlay exclusive contracts generally make it hard for one to get licenses from all the labels. The Music Online Competition Act, proposed by rep. Rick Boucher, and rep. Jack Cannon would ease this licensing hassle. Ultimately, compulsory licensing may be the only solution to really fix the problem.
The Department of Justice is currently investigating the labels licensing practices. The RIAA represents foreign corporations, such as Sony, which is based in Japan. In addition, the record labels are being investigated for fraud. They are trying to monopolize all 'new media technologies'', to the point in which new mediums cannot be invented by non-member companies, or without their permission.
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For the decentralized systems, compensation is a little bit harder. However, myself, along with Ian Clarke of Freenet, and Matt Goyer of Fairtunes, beleive that it is possible to ''reward artists without copyright''. There are many ways of doing so, even if a company does not run the distribution system.
Fairtunes (now MusicLink) created an ''artist tipping'' system. This system allows one to use their credit card, and Fairtunes would send a check to the artist or songwriter. Some clients like Kick and Freeamp, have built in Fairtunes/MusicLink tipping. This has generated many thousand dollars to artists by people giving voluntary compensation. Adding this kind of a feature to any P2P system (including decentralized systems) is easily doable. Many artists believe that the current system of copyright and label ownership is failing to reward artists. On VH-1s show ''Behind the Music'', you hear story after story of artists being ''ripped off'' by the music industry.
Another way of compensation that I propose myself, would be to embed royalties in the price of BLANK CDs, DVDs, MP3 Players, and the like. This could generate a lot of revenue, and for each ''royalty paid'' disk, you get a license to fill it up with content from P2P systems, ''rips'', and other content.
Another way that I thought of would be to tax Internet service. If each user paid a monthly fee of $0.35 for dial up connections, and $1.00 per month for broadband, this would generate tens of millions of dollars per month, or billions annually. These royalties could be passed on to artists, songwriters, TV show producers, movie producers, movie studios and the like. I think that a reasonable distribution of these ''taxed'' funds, should be a 47-47-6 distribution. That is 47% of the money go to the individuals that create the content (i.e. artists, songwriters, actors, producers, etc), and 47% to the companies that create the work (such as labels, publishers, studios, game companies, etc), and leave 6% for independent, unsigned groups (such as independent filmmakers, unsigned bands, garage bands, local bands, K-12 Music Programs, College Music Programs, church choirs, youth choirs, etc).
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The system should have a means to get these royalties to the parties, quickly and efficiently. If the payments are through an agency, it needs to be totally neutral (i.e. not owned by any artist, songwriter, record label, music publisher, movie studio, game company, or lobby or trade organization). An independent organization along the lines of ASCAP or BMI would be best in my opinion. In any case, it should be frequently and publicly audited.
Fair Use and how Digital Rights Management is not the solution to this P2P issue:
First of all, digital rights management (DRM) is designed to restrict use, not to benefit the consumer. This technology limits use, and in fact often alienates the consumer. The next problem is that DRM in not secure forever. All DRM is hackable in some form. Last of all, according to Professor Leland Beck at San Diego State University told me that ''encryption'' is not a good copy protection system, because it does not prevent bits of data from being copied at all, it only prevents reading and decoding of data.
The nature of digital technology is that every bit of information is encoded into ones and zeros. This means that all that any digital chip can detect are ones and zeros. This makes ''perfect'' copies the norm. If you can find every bit that a medium can detect, and put it to the exact same location on the destination, the copy will be seen as an original.
People have used copy protection technology for years. Back in the Apple II days, copy protection on disks was the norm. Yet, people and companies figured out the protection systems, and wrote software that would copy it. Central Point Software wrote a new version of Copy II, every time a new protection system was released that would copy those protected disks. Also, people rejected the copy-protected disks, and some customers refused to buy copy-protected software if there were an unprotected competitor. A court case in 1984 proved that a program that copied protected disks could be sold, since it allowed the user to make backup copies.
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The music industry should have learned that copy protection is hacked quickly. It took Professor Felten and his students only a few weeks to crack the Secure Digital Music Initiative (SDMI) audio watermark schemes. Beale Screamer created a utility called FreeMe that unprotects WMA audio files. It did not take screamer long to crack that.
Even encryption built into hardware can be cracked. Many coin-op arcade games had hardware DRM built into them. Yet, many of them have been cracked, often within a few months after the release. Many emulator developers have also cracked arcade games to play them on a PC. Team CPS2Shock figured out a way to decrypt games on the Capcom Play System 2 Arcade System by using some code of their own in RAM on the board, and some wiring to a PC. The DVD encryption was figured out by a 16-year old named Jon Johansen to play his DVDs on a Linux computer.
Next of all, the DRM is only as good as a player that honors it. For example, if one has a sound card with no digital ''record back'' disable, and one ''records'' the protected content back to disk and saves it as MP3, they can now share it over Gnutella. Even connecting the analog out to another computer's analog in is a way to unprotect content.
Lets face it no DRM system is secure forever. Mandating security standards into computers, like the Hollings Bill would require would just cause the consumer frustration, and that it will encourage a hacker to figure it out. Also, new formats will not be secure with old DRM chips. Michael Eisner from Disney was asked, what if one records a movie in a theatre, saves it in a format the DRM in the computer does not recognize, and then shares that file over Gnutella? His answer is ''nothing''!
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Last of all, DRM limits fair use. People have ''fair use rights'', to time shift, space shift, to reverse engineer, to quote, and the like. Limiting these creates headaches for a lot of people. Being locked out of content will just ENCOURAGE hackers to break the DRM code, just like prohibition did with liquor in the 1920s.
DRM will not solve the P2P issue. It will just encourage the development of unprotected formats. Even if illegal, people will download and create these formats anyway. In my opinion, there is no way to stop a consumer getting an unprotected, perfect copy of content in the digital world.
Spying on consumers as ''copyright police'' is not a viable option too. This option is expensive. It also violates ones rights to ''innocent until proven guilty'', ''right to a fair trial'', and the like
Placing ''Spoof'' files on P2P networks that contain 30-second loops or 3 minutes of silence is not a long-term solution either. It just infuriates the consumer, and does not stop them from downloading ''real'' content files. Also, it is encouraging the development of blocking systems that the consumers are using to block known ''spoof IP Addresses''.
Conclusion:
I hope that congress takes my input, and puts P2P to good use, and understands how it benefits all, including consumers, artists, and the like. I do not think it is worth banning, and it should be legal to use it, and not have the content available on P2P Networks censored or controlled by large corporations.
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PREPARED STATEMENT OF PANOS ANASTASSIADIS
Thank you for the opportunity today to submit our insights regarding piracy on distributed Peer-to-Peer networks.
Cyveillance is engaged in providing Internet Intelligence services to a client list that includes 19 of the Fortune 50 companies, and I assure you that all of these firms share the same concerns regarding the theft of intellectual property via the Internet. In fact, what drives our business success is the huge potential that exists today in recapturing revenues lost due to such activity.
Our services are underpinned by patented technology that scours the entire Internet and delivers distilled, 100% relevant intelligence provided in a prioritized manner that can be readily acted upon.
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It is interesting to note that distributed Peer-to-Peer networks are only one portion of the Internet that experiences traffic in IP theft, even though they by far experience the highest volume of such activity. Web sites, message boards, IRC chat, FTP, newsgroups and auction sites all experience their share of discussion and participation in the theft of Intellectual and Physical property.
The size of the piracy problem itself is not a new discussion topic. And the medium that has received the most press to date—helped along by the Napster case—has been music. But, as we know with anything facilitated by technology or the Internet, the issue has spread and evolved rapidly.
Today for example, it is estimated that over 20 million movies are being downloaded each month. Billions of dollars of intellectual property from the largest businesses in the world are impacted by IP theft to include music, motion pictures, games, software and ePublishing. The most trafficked area of the Internet for such illegal activity is on distributed Peer-to-Peer networks; just yesterday, September 25, the most active distributed Peer-to-Peer network had 2,940,981 users online, and that was just one network.
We use the term ''distributed'' Peer-to-Peer network because there is a difference. For example, Napster (not ''distributed'') faced a legal challenge that centered around the means of distribution and how the files were managed. In the Napster case, file catalogues were centrally housed and managed. On true ''distributed'' Peer-to-Peer networks however, there is no centralized catalogue and the network owners clearly state that they have no control over content.
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Distributed Peer-to-Peer networks and the efficiencies of their architecture provides many positive benefits to the online community as a whole, although sharing legally-protected intellectual property is not one of them.
For the rightful owners of intellectual property, effectively addressing the piracy issue is not a singular effort but a multi-pronged approach. As a leader in Internet Intelligence, our experience has shown that a best-practice approach will include a number of components:
1. Further educate consumers on the fact that downloading proprietary content is not ''ok.'' An entire generation of users has grown up under peer assumptions that there is nothing wrong with downloading proprietary content.
2. Gain awareness of the size and scope of the problem through technology monitoring. You cannot manage what you cannot see. This can only be accomplished through proven Internet Intelligence technology.
3. Enforce and protect what is rightfully identified as IP theft. Not taking action is not an option.
4. Offer reasonable and legal alternatives to obtaining quality files and IP. The industries experiencing theft must come up with reasonable legal alternatives before the public will adopt proper channels of obtaining content. '' Reasonable'' includes pricing that compensates the owners and distributors, but reflects the lower cost of distribution over the Internet, thereby creating a win/win with consumers.
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5. Measure the size of the problem on an ongoing basis. Employ technology to monitor success and trends.
In order to realize the benefits of such a plan as described, businesses should not be handicapped in their ability to work with effective self-help technology measures that cause no damage to non-offenders on the networks or the networks themselves. These barriers should be removed by the modification of the Digital Millenium Copyright Act (DCMA) to include notice on distributed Peer-to-Peer networks.
PREPARED STATEMENT OF EDWARD W. FELTEN
To the Distinguished Members of the Subcommittee on Courts, the Internet, and Intellectual Property:
I am writing to provide an independent perspective on some technical issues raised by Congressman Berman's proposed ''P2P Piracy Prevention Act'' (the ''Berman Bill''). I offer this testimony in the hope that it will help the Subcommittee better understand the technical effects of the Berman Bill.
I write as an expert on computer security. I am an Associate Professor of Computer Science at Princeton University, and Director of Princeton's Secure Internet Programming Laboratory. I have published more than fifty research papers and two books, and my research has been covered widely in the national press. In addition to my service on corporate advisory boards, I serve on the Information Science and Technology (ISAT) advisory board of the Defense Advanced Research Projects Agency. I am co-chair of an ISAT study on ''Reconciling Security with Privacy,'' and am a member of the National Research Council's study group on ''Fundamentals of Computer Science.'' I have also served as the primary computer science expert witness for the Department of Justice (DOJ) in the Microsoft antitrust case, and as a technical advisor to the DOJ's Antitrust Division under both the Clinton and Bush administrations.
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I share the Subcommittee's condemnation of widespread on-line copyright infringement. I support both legal action against copyright infringers, and technical self-help by copyright owners within the bounds of current law. The issue is not whether copyrights should be honored, nor whether the Berman Bill is well-intentioned, but rather what effect the bill would have.
I would like to bring two things to the Subcommittee's attention.
First, the Berman Bill's definition of ''peer-to-peer'' may be problematic. Peer-to-peer networking is not a new phenomenon, but has been the dominant mode of operation since the very beginning of the Internet. The World Wide Web itself is a peer-to-peer file sharing system, as the term ''peer-to-peer'' is commonly understood. More to the point, the Web clearly meets the Berman Bill's definition of ''publicly accessible peer-to-peer file trading network.'' Therefore, the bill, as written, flatly authorizes ''self-help'' attacks on the World Wide Web, and not just on users of file-trading networks like KaZaa and Gnutella.
It seems difficult to redraft the bill to carve out the Web and other legitimate network services, without creating an escape hatch for the types of peer-to-peer networks that the bill's supporters would like to see covered. The reason for this difficulty is simple: there is really little difference at a technical level between the Web and peer-to-peer systems like KaZaa and Gnutella. The difference between these systems is not so much in how they are designed, but rather in what their users do with them.
(I also note in passing that the bill's exception for systems that ''route all . . . inquiries or searches through a designated, central computer'' may not have the effect that the bill's drafters envisioned. Nowadays large sites do not use a single ''designated, central computer,'' but instead use a group of computers which cooperate to serve users' requests. It would appear, therefore, that the bill's ''designated, central computer'' exception would cover few if any of the large central sites for which the exception appears to be intended.)
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Second, there is reason to doubt the efficacy of the technical measures that copyright owners want to use.
The copyright owners' representatives who testified in person at the Subcommittee's hearing could identify only one technical measure they plan to employ if the Berman Bill is enacted. This measure, which they call ''Interdiction,'' was described in the written and oral testimony of Mr. Randy Saaf. Based on Mr. Saaf's description, ''Interdiction'' is apparently just a new name for a well-known type of denial of service attack.(see footnote 5)
A ''denial of service attack'' is a hostile action that exhausts the resources of a system or program, so that that system or program cannot operate, or can operate only in a degraded fashion. Some denial of service attacks seek to overwhelm a target computer's Internet connection with traffic, while others seeks to exhaust some other resource that the target needs.
For example, the so-called ''SYN flood'' denial of service attacks that (temporarily) disabled CNN, eBay, Yahoo!, and Amazon, in February 2000, disabled the target systems by initiating network connections with the targets in such a way that the targets were no longer able to accept further connections. Though the targets had plenty of spare communication bandwidth available, that bandwidth did them no good since they could not accept any more incoming network connections.
''Interdiction'' operates on a similar principle. According to Mr. Saaf's written testimony:
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MediaDefender's computers hook up to the person using the P2P protocol being targeted and download the pirated file at a throttled down speed. MediaDefender's computers just try to sit on the other computers' uploading connections as long as possible, using as little bandwidth as possible to prevent others from downloading the pirated content. . . .
The goal is not to absorb all of that user's bandwidth but block connections to potential downloaders. If the P2P program allows ten connections and MediaDefender fills nine, we are blocking 90% of illegal uploading.
At present, Interdiction attacks apparently deny service only to the peer-to-peer program running on a user's computer, and not to any other programs. The designers of peer-to-peer software will not simply accept this situation, but will respond by modifying their software to thwart such targeted denial of service attacks. They might do this, for example, by eliminating the self-imposed limit on the number of connections the peer-to-peer program will accept. These countermeasures will start an ''arms race'' between copyright owners and peer-to-peer system designers, with copyright owners devising new types of targeted denial of service attacks, and peer-to-peer designers revising their software to dodge these targeted attacks.
Computer security analysis can often predict the result of such technical arms races. For example, analysis of the arms race between virus writers and antivirus companies leads to the prediction that antivirus products will be able to cope almost perfectly with known virus strains but will be largely helpless against novel viruses. This is indeed what we observe.
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A similar analysis can be applied to the arms race, under the Berman Bill's rules, between peer-to-peer authors and copyright owners. In my view, the peer-to-peer authors have a natural advantage in this arms race, and they will be able to stay a step ahead of the copyright owners.(see footnote 6) Copyright owners will be forced either to give up on the strategy of narrowly targeted denial of service attacks, or to escalate to a more severe form of denial of service, such as one that crashes the target computer or jams completely its Internet connection. I understand that these more severe attacks are currently illegal, and would not be legalized by the Berman Bill, so such an escalation would not be possible within the law even if the Berman Bill is enacted. I conclude that the Berman Bill as written is unlikely to do copyright holders much good in the end.
(Footnote 1 return)
''A Chat with Hillary Rosen,'' Brad King, Wired Magazine, http://www.wired.com/news/culture/0,1284,39108,00.html
(Footnote 2 return)
USIIA Code of Practice, Article VI, as adopted by the USIIA Board of Directors January 5, 1995.
(Footnote 3 return)
''2001 US Economic Review—Box Office'', Motion Picture Association of America, at http://www.mpaa.org/useconomicreview/2001Economic/index.htm
(Footnote 4 return)
Data provided by market researcher NPD Techworld
(Footnote 5 return)
For example, a speaker at this year's H2K2 ''Hackers on Planet Earth'' conference reportedly suggested using the attack that Mr. Saaf calls ''Interdiction'' against governmental and institutional Internet sites as a form of ''online demonstration.''
(Footnote 6 return)
I understand that the House of Representatives uses technical means to prevent peer-to-peer file trading by its employees. Of course, the ability of an organization such as the House to control the use of its own systems does not imply that copyright owners can exert the same level of control on others' systems.