Changing the Network Infrastructure– Threats and Possibilities

Alex Alben

Nobember 6, 2003

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The Old Wide World of Global Media

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Is the Old Distribution Model Broken?

• Moving toward 1 billion Internet enabled users around the world– with at least 30% enabled to access audio-visual media.

• Digital Media distribution across borders breaks the territorial model that has prevailed for over 100 years.

• Consumer identity is “territorial” and emphasizes different legal regimes: U.S. vs. EU vs. China

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Have the Pirates Won?

Industry estimates of losses due to Conventional Means of Piracy:

• Film-- $3 Billion annual (MPAA) from $40 Billion revenue

• Music-- $4.2 Billion annual (RIAA/IFPE) from $32 Billion global revenue

• Software-- $13-15 Billion annual (BSA/SIAA)

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Today’s Legitimate Marketplace:

Category Books Music

Video Streaming Services

Ease of Use

yes no no yes

Privacy Trusted Sellers

maybe maybe maybe

Price Point

Perceived Value

no maybe maybe

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Goals of the DMCA

• Make the Internet safe for digital distribution of valuable IP (music, movies, software programs).

• Harmonize American law with Berne Convention.

• Preserve the “copyright balance” in a new medium.

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The DMCA in Practice

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DMCA in Practice– The Good

• The Safe Harbor for ISP’s– Legacy of the Netcom case– “Notice and

Take Down”– Has worked well in the ISP context

• Proper enforcement of the DMCA– RealNetworks v. Streambox

• RIAA vs. Verizon– User privacy vs. DMCA subpoena power

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DMCA in Practice– The Bad

• Free Speech and the DMCA:– The DVD-CSS distribution cases– How do you stop redistribution of a tool

that does bad things without also controlling linking?

• The DeCSS Hack– Prosecution in Norwegian court– Economic harm?– Pointed out interoperability issues

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DMCA in Practice– The Ugly

• Internet Radio Royalties:– Process took three years to reach a result– Rates for Internet radio 7-10 times higher

than performance rates for terrestrial radio– CARP process is broken

• Unexpected uses of the DMCA:– Lexmark v. Static Control, Skylink v.

Chamberlain– Was the DMCA meant to cover any product

that could be wrapped in a technical protection measure?

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Two Visions of Fair Use

• The Valenti School: The anti-circumvention rules stand apart, because distribution of a circumvention tool under a “fair use” safe harbor would lead to wide-spread disregard for copy protection.

• The Boucher School: The anti-circumvention rules should be subject to a fair use test, allowing consumers to selectively break protection measures as long as their underlying behavior is legal.

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The Future

• Legislative battle over meaning of “fair use” will continue.

• Sony “non infringing use” test will not be used to shut down peer-to-peer technologies.

• Expansion of the DMCA to aftermarket products must be curtailed.

• Online– piracy will only decline when legitimate services offer equivalent products

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The New Wide World of Digital Media