RIAA Not Keen on Internet Legislation, Except Leahy Bill

The Digital Millennium Copyright Act has outlived its usefulness in regulating a dynamic and fast-changing music environment, RIAA President Cary Sherman told the Rethink Music conference in Boston Wednesday. That track record has left the major labels skeptical that further U.S. legislation, such as creating a graduated-response system for cracking down on copyright infringement online, as several countries have adopted, would be especially helpful, he said. But the RIAA still considers the Combating Online Infringement and Counterfeits Act, soon to be reintroduced by Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., “very reasonable” for dealing with offshore infringing websites, Sherman said.

"Even with hindsight, it’s pretty hard to know” how the RIAA could have better responded to the onslaught of file-swapping traffic that swarmed the Internet starting with Napster, Sherman said: Nobody would have spent 99 cents for an iTunes single without industry enforcement. The RIAA had no choice but to sue Napster, and then to unsuccessfully sue decentralized swapping services and finally end users, as suggested by “the other side,” Sherman said, citing Hill testimony from Public Knowledge. The litigation campaign at the least showed the public “what was legal and what was not” and it changed behavior, with P2P growth slowing relative to broadband adoption, he said: “The educational benefit has basically worn off” so the RIAA dropped the end-user suits.

"We're still if not in the beginning, at least in the middle” of dealing with the Internet’s effect on the music industry, Sherman said: Congress and the courts have yet to resolve some disputes over rights and business partnerships that “didn’t exist 10 years ago.” The main problem is the difficulty in licensing music efficiently so industry players can make the full catalogs of music available to the public, he said. “It’s very difficult to have entire industries accept entire new business models,” let alone agree on how to price new services, with the threat of antitrust enforcement hanging over potential discussions. Similar to the issue of orphan works in the Google Books settlement, Sherman said it can be hard to find and get cooperation from “thousands” of music publishers and indie labels.

The RIAA isn’t interested in mandating a graduated-response system for cutting off alleged infringers in the U.S., because legislation applied to the Internet “tends to freeze things and make them less flexible than they need to be,” Sherman said. The conditions for getting statutory licenses in the DMCA, for example, are “obsolete” by now. Record labels are confident they can convince ISPs to voluntarily notify their customers that infringement has been detected on their accounts without resorting to legislation, he said. Leahy’s COICA bill, on the other hand, is the only way to deal with offshore infringing activity, by seizing domain names and compelling intermediaries like payment and ad networks to cut off services to pirate operations, Sherman said. The bill provides a “very high standard” in court to identify a site as baldly infringing, he said.

The recording industry largely doesn’t worry about the explosion of remixes, mashups and other derivative works being created on YouTube and elsewhere, Sherman said, partly because labels sometimes invite fans to create their own for promotional purposes. It’s not interested in “capturing rents” from those services, as phrased by Harvard University professor and panel moderator Jonathan Zittrain, author of The Future of the Internet -- and How to Stop It. With the sheer volume of whole songs and albums being downloaded for free, “it would be a crazy use of our time” as record labels to pursue payment for derivative works, he said, though individual artists and publishers may feel differently about particular works. Sherman agreed with Zittrain that automatic removals of remixes on YouTube and elsewhere were like a “dolphin caught in a net,” but Sherman said labels typically withdraw such takedowns when they learn remixes are involved.

Google isn’t hoping to get much in the way of legislation either, said Fred von Lohmann, the company’s senior copyright counsel and previously a longtime Electronic Frontier Foundation lawyer. “In a time in a great deal of flux, it’s not necessarily the ideal moment to freeze things in law.” Google agrees with the RIAA that “better, faster licensing” is a “crucial piece” of reducing the lure of infringement for users, though the music industry is largely to blame for not being “more forthcoming” with simplified licensing 10 years ago, von Lohmann said. The success of European streaming service Spotify cutting into piracy rates in Sweden, one of its first markets, shows the potential for licensed free services, he said.

The Viacom infringement case against YouTube exemplifies one of Google’s biggest concerns with the law -- the range of statutory damages available to copyright owners -- up to $150,000 per work for willful infringement, von Lohmann said. What’s amazing about the case is Viacom has no problem with how YouTube runs today, only its early behavior as a startup, he said. That’s also the crux of Microsoft’s friend-of-the-court brief in the 2nd U.S. Circuit Court of Appeals’ hearing of Viacom’s appeal, said Tom Rubin, Microsoft chief counsel for intellectual property strategy. Microsoft defended Viacom solely on the “very limited issue” of YouTube’s behavior before 2008, when it made a raft of changes to appease copyright owners, and the need to examine the factual record at trial, Rubin said. YouTube initially won the case on summary judgment.

The use of graduated response under France’s three-strikes law was more contentious among the panelists. Kaya Koklu, senior research fellow at the Max Planck Institute for IP and Competition Law, said the law, now in effect for more than a year, hasn’t improved the “acceptance” of copyright rules in France. He cited university research that showed infringement volumes have gone up in the past year. Courts in France can order an ISP subscriber’s service cut off for up to 12 months after the third violation. “France is doubting” that identification of IP address alone is enough to cut off someone’s service, though, considering that no one has yet had a third strike, he said. Koklu alluded to discussions on creating a “backup software approach” in which users would voluntarily download software that tracked their Internet history, providing evidence of their innocence if a third strike ever did fall.

The particulars of the French system are even more troubling, Koklu said. The law prevents a user from contesting any strike before the third, it requires users who are cut off to continue paying for the flagged ISP account, and it adds them to a “blacklist” that prevents them from getting service from another ISP. They would have to visit Wi-Fi hotspots such as at Starbucks to get online, he said. The RIAA’s Sherman defended the graduated response system in France as appropriate, given the due process afforded to accused users. But he agreed the blacklist is “more punitive than necessary.” The key is to “impose some consequences” on users for infringement, Sherman said, citing surveys that show about 70 percent of users say they would stop infringing if their ISP notified them of the activity.

Copyright education remains the key, said von Lohmann. YouTube recently introduced a “copyright school” for users whose accounts were frozen for copyright violations, giving them a process to get back their account permissions. “We're never going to enforce our way out of all these complicated issues.”