I just had an interesting email discusssion with student (I think) Rick Thackeray about Grokster and filesharing. His comments and questions are in italic; mine in Roman.

03/30/05
James --

I just found your blog and read your response to the Grokster arguments. Based on what I heard from Nina Totenberg and what I have read in the major papers, you found the most interesting quote from the justices -- i.e., Justice Kennedy's bit about start-up capital.

Anyway, I wonder if you could help settle a few IP points related to the whole music downloading legality question:

1. Libraries own music CDs, or rather, own licenses to allow library members to listen to the music contained on the CDs. Such a library member properly borrows such a CD from the library, but uploads the music to his computer hard drive for later personal use (i.e., listening on the computer or synchronization to an MP3 player and listening thereafter). Does such listening/use follow from the library borrowers legal use pursuant to his borrowing? Stated differently, isn't that borrowers transfer of the songs to his computer for personal use merely an extension of the permissible use he undertakes pursuant to the library's license?

2. Consumer buys 8-Tracks, Albums, and Cassettes during the 1960s, 70s, and 80s. By doing so, he acquires licenses to listen to the music contained on the media he obtained through such purchases during those eras. For example, imagine that he owns a vinyl copy of the Beatles White Album, an 8-Track of Steve Wonder's "Songs in the Key of Life," and a cassette version of Duran Duran's "Rio." Move ahead to 2003, when the consumer considers how he can legally listen to the music on his IPod -- music he legally whose license he legally and ethically purchased in the past, albeit on media that do not provide (affordable, if even obtainable) platforms by which they may be uploaded to his computer and IPod. The question then becomes, if he already obtained legal license to the music contained on the three LPs listed above, shouldn't that license extend to downloaded versions of "Back in the USSR," "Sir Duke," and "Rio."? When he bought those songs on 8-Track, album, and cassette, he didn't pay JUST for the plastic and vinyl -- he paid for the license for personal use of the music for a reasonable period of time. Wouldn't that license to personal use of particular music transfer to the newly donwloaded versions of the same song?

I hope you consider these questions. Several friends are grappling with the ethics and legality of downloading and digitalization of their music collections.

Rick Thackeray

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03/31/05
Rick --

Good questions. Here are my thoughts.

And do you mind if I post both your original email and this reply on our WebLog?

General Comment.

I look at these issues from an ethical and economic standpoint rather than a legal one, since my view is that property rights spring from the necessities of the culture, and that the law should follow the culture rather then vice versa. (See Property Matters: How Property Rights Are Under Assault--And Why You Should Care, Free Press 1997. Available used and cheap on Amazon.)

Within this context, my usual question is "what rules are necessary to make the system work, to provide creators with an incentive to create and to share the costs among consumers and avoid free riding?" ("Creator" includes all the middlemen necessary to a system, too; none of this anti-corporate nonsense about greedy record companies. Yes, they are greedy, but that is the engine of progress.)

You might also be interested in the PFF amicus brief in Grokster, which argues that the underlying structure of the case is that consumers have a Prisoner's Dilemma problem.

Libarary Material

The library model works only because the use of the library's copy is rationed to one person at a time. This creates a choice for consumers -- free access, if you are patient, or buy the product if you are in a hurry. Also, assuming each reader keeps a book out for a week, each library copy replaces only 50 sales in a year.. And, of course, assuming that many people would not buy the book if they had to pay for it, the displacement is less.

The model you propose breaks the inherent rationing, and is unworkable. Yes, I know that the proponents of sharing argue that it makes no sense to create "an artificial scarcity" of a resource, and they are right in a way-- but if you shift the perspective, it makes eminent sense to create a mechanism whereby all those who want to benefit from the production of an intellecctual work agree to the enforcement of mechanisms to force each other to contribute to its creation, and to prevent free riding. Creating an "artificial scarcity" is the means to this end.

I have sometimes mused on writing a paper on why the free public library was a bad idea, and the world would have been better served by the development of rental libraries that charged users by the day or by the read and shared their revenues with creators. (Perhaps with sliding fees according to the weight of the tome.) In my view, such libraries would be much more vibrant institutions. And by now we would have eBooks and BookFlix.

Consumer buys 8-Tracks, Albums, and Cassettes during the 1960s, 70s, and 80s.

(The formal legal answer is probably different, by the way. Since the music is licensed for a particular format and player, all rights not granted are reserved to the grantor. But this is a case where the culture is forcing the legal system to think it out again.)

But we are in good company here -- the RIAA, which says on its website:

MP3 is just a technology and the technology itself never did anything wrong! There are lots of legal MP3s from great artists on many, many online sites. The problem is that some people use MP3 to take one copy of an album and make that copy available on the Internet for hundreds of thousands of people. That's not fair. If you choose to take your own CDs and make copies for yourself on your computer or portable music player, that's great. It's your music and we want you to enjoy it at home, at work, in the car and on the jogging trail. But the fact that technology exists to enable unlimited Internet distribution of music copies doesn't make it right.

Ethically, I don't see much difference between my copying a CD onto a computer and you downloading from the Internet music that you have on tape -- but I have no idea if the industry would go that far. The law is probably against it -- see UMG Recordings v. MP3.Com. (But I find this a much tougher case than did the court, which paid no attention to the idea that maybe the consumers now owned the music. My main concern would be the ease with which fraud could be perpetrated under the MP3.com system.)

The problem, of course, is that if the courts were to approve of Grokster and KaZaa on the grounds that such downloading is a "fair use," there would be no way to police all the "unfair uses" that would then blast through the loophole. So I fear this is an instance in which an activity that is actually ethical must give way to the general interest in promoting a system that works to the advantage of all consumers.

Best regards,
Jim DeLong

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03/31/05
Thanks for your thoughtful answer. Feel free to post this and my questions on your blog. I suspect you are right about the policy driving the courts' view -- that the enforceability problems would urge courts to weigh in favor of protecting the copyrighted material. I guess we'll know more by June, or whenever the opinion is published.

Regards,
Rick Thackeray

posted by James DeLong @ 5:27 PM | Internet: P2P, Search Engines...

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