Fighting For The Right To Share
Aliya Sternstein, 11.14.03, 12:00 PM ET
NEW YORK - Ian Clarke, inventor of file-swapping service Freenet, has departed the United States for the United Kingdom, where copyright laws are more lax. Wayne Rosso, the man behind file-sharing service Grokster, left for a peer-to-peer network in Spain, again saying goodbye to thorny copyright issues.
File sharing has gotten a black eye from illegal downloads of copyrighted music and movies, but the technology behind it is important. A legal network of shared thinking will hasten drug research, software development and the flow of information. But U.S. copyright laws, designed decades before the Web was ever conceived, have tied file sharing--and many other Internet technologies--in knots.
The traditional holders of copyrighted material have dug in for a long fight against any loosening of the laws. In 1998, after intense lobbying from The Walt Disney Co. (nyse: DIS - news - people ) and other companies, the U.S. Congress passed a law making corporate copyrights good for 95 years and those owned by individuals good for 70 years past the creator's death. In January, the U.S. Supreme Court extended that law for another 20 years. But if the old-liners continue to get their way, the public domain in the U.S. will virtually disappear. And early-stage Internet innovations from digital music stores to virtual actors will forever be stuck behind legal firewalls.
The losses suffered by traditional copyright holders have piled up. A spokesman for the Recording Industry Association of America claims that 2 billion songs worldwide are downloaded illegally every month; software developers like Microsoft (nasdaq: MSFT - news - people ) say the industry loses more than $10 billion per year to illegal software; the Motion Picture Association of America puts piracy losses in the U.S. at more than $3 billion per year. According to the Business Software Alliance, a Washington, D.C.-based lobbying group, a ten-point drop in worldwide piracy over the next four years would add 1.5 million jobs and $400 billion in additional economic growth.
Also piling up: lawsuits, against both the downloaders and the Internet service providers that transmit their booty.
Yet the recent gains scored by legal file sharing show just how much money is at stake on the other side of the copyright divide. In just five months, services such as Apple Computer's (nasdaq: AAPL - news - people ) iTunes, RealNetworks' (nasdaq: RNWK - news - people ) Rhapsody, BuyMusic.com and others have collected about $9.5 million in legal music-download fees, according to Soundscan.
One of the ways content providers aim to control distribution is through technology called digital rights management, which essentially assigns usage rights and fees to everything from entertainment to e-mails to medical records. Giants like Sony (nyse: SNE - news - people ) and IBM (nyse: IBM - news - people ) are promoting DRM technology.
Can copyrights be protected without stifling innovation? Ultimately, the protection of content and jobs hinges on collaboration between producers and distributors.
Among the ideas being floated by lobbying groups like P2P United: a royalty pool created from small charges on Internet service, blank CDs and CD burner equipment. These so-called compulsory licenses would mean consumers broadly share the cost for all copyrighted music that passes through the ISP.
But such licenses would require the approval of the U.S. Congress, says William Fisher, a Harvard Law professor and director of the Berkman Center for Internet and Society. The idea would also get pushback from ISPs. "We would become the world's most complicated billing system," says Sarah Deutsch, vice president and associate general counsel for Verizon Communications (nyse: VZ - news - people ), which is not promoting compulsory licenses.
There may not be any consensus on how to control distribution and licensing of content, but most agree that it's a train that can't be stopped.
History shows that conventional media reflexively shuns novel technology. In 1908, a music publisher sued a player piano company. The Supreme Court ruled that making piano rolls was not close enough to publishing music to be prohibited. In 1984, Universal City Studios and Walt Disney Productions took the VCR to court. There, the judges decided that taping TV programs at home was fair use, to the glee of VCR and Betamax makers and owners.
Hanson, the teen group behind the hit song "Mmmbop," launched a Web site during the Web's music infancy. Six years later--with a new album and tour--the brothers still support online music. "Whether it's a tax or 99 cents for a song, we gotta work something out," says 18-year-old Zac Hanson.
Somewhere in the middle of cyberspace, the kids and the grown-ups have to lay down some ground rules. Even the U.S. Constitution was a compromise.
