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Some points encouraging P2P technology

Napster, Inc., an Internet service, operates a system allowing the transmission and
retention of digital audio files between and among its users." Unlike previous systems
that allowed transmission through a centralized server, the Napster system allows its
users to connect directly to one another via the Internet. In conjunction with Napster's
network servers and server-side software, Napster's MusicShare software allows users
to make MP3 files stored on personal computer hard drives available for copying by
other Napster users. To transfer a copy of a requested MP3 file, the Napster serverside software directly connects the requesting and host computers and then transmits
the MP3 file to the requesting computer. The MP3 files transferred between users do
not pass through Napster's servers at any point during the process, and Napster does
not obtain copies of the transferred files.'
MP3 and peer-to-peer file sharing technology have substantially reduced the music
industry's traditional influence by allowing new artists to promote and distribute their
music directly to consumers in the format of a downloadable MP3. These innovations
also expand consumers' choice of music because they can now locate and download
music that was largely unavailable through traditional modes of distribution.
Against decision of District and Appellate Courts
As economists, we can use what economic principles teach us to evaluate if current
copyright protection ultimately benefits consumers and music creators or if, instead, it
is mainly instrumental in creating abnormal profits for intermediaries such as record
companies and music publishers. This argument has two parts: the first says that
downloading music is theft, and the second says that if downloading is permitted the
incentive to produce good music would disappear.
1. The action of freely sharing the music files through the Internet with other Napster
users all over the world is theft
Downloading music, copyrighted or not, is quite different from theft in the ordinary
sense of the word. Theft, as we ordinarily mean it, amounts to depriving the owner of
the use of the object of his property or, at least, greatly reducing his access to it. If you
steal my MP3 player, I can no longer use it. Whether you use it, resell it, or just throw
it away, it is theft. In this sense "intellectual property" is quite different than property
of material objects. Indeed, the argument is not over the right of the music industry to
sell its product, nobody is stealing CDs via Napster, but rather over their ability to
regulate the future use of their products by those who purchase them. As far as we
know, no one has accused people who make available music from their CDs on the
Internet of having stolen the CDs. Rather the question is, having purchased the CDs,

the music industry would like to prevent us from further distributing the music. But is
there a valid economic rationale for this? If I purchase a car, I can resell it in direct
competition with the manufacturer of the car. In fact, also if I purchase a CD I can
resell it. I can also let other people listen to it in my house, with my friends, not for
any economic purpose.
2. The RIAA argument: people should not have the right to transfer the music
because, by breaking the monopoly, they eliminate the incentive to produce further
good music.
Naturally, if the monopolist has to compete with his own past customers then his
ability to extract money from his new customers is reduced. One consequence of this
is that it would be much more difficult for him to "price discriminate," charging a
higher price to those customers who place a particularly high value on his product.
Moreover, in the past, despite of the much less favorable economic conditions, an
enormous amount of art of all kinds was created, which we still admire, read, listen to
and ... reproduce without bothering much about copyrights. Then does the legal
monopoly given to copyright holders make sense for anybody else but themselves?
3. The record companies contend that Napster is facilitating copyright infringement on
a massive scale by allowing its millions of members to search for songs on each
others' computers and to download them for free
Napster actually helps spur CD sales, noting that retail music sales figures have
climbed since the service began. According to a survey by a Wharton School of
Business professor, 70 percent of Napster members polled reported they've used the
service to sample music before buying it, the brief added.
Change in file-sharing technology
On a larger scale, the hostile attitude towards file-sharing services of RIAA has
proved itself to be counterproductive. Firstly, P2P is a trend almost inevitable in the
digital age. Following the establishment of Napster, there have been a continuous
influx of other P2P softwares. In fact, Napster was replaced by Aimster and
AudioGalaxy, which were supplanted in turn by LimeWire, Morpheus and Kazaa,
which were then partially supplanted by eDonkey and BitTorrent. And this tendency
will not cease to end. Today, P2P networks flourish independently of any particular
software vendor. P2P comprises 45% of Internet traffic, in part since technologies like
BitTorrent have been adopted for a variety of mainstream legitimate uses. Moreover,
even if one P2P service provider agrees to filter authorised content, others will jump
in and provide users with the unfiltered music, not to mention the fact that these
alternatives are constantly more effective in protecting the anonymity of the

filesharers. The widespread of these platforms is facilitated partly because developing


such applications is well within the capabilities of small offshore companies and even
amateur programmers.
On the other hand, the music industry, or RIAA in particular, responded to this
massive development aggressively, treating these file-sharing services as a major
threat to its revenues, although they were also being used for non-infringing purposes,
such as sharing of authorised songs, live concert recordings and public domain works,
helping promote indie artistes that otherwise do not have the budget to do so on their
own. The RIAA even went so far as to have a lawsuit campaign against tens of
thousands of American individual music fans and university students using these
services. These costly lawsuits proved to be ineffective at best and unfair at worst,
since they only addressed and penalised a random portion of the million users deemed
to have violated RIAAs copyrights. The campaign has not put a penny into the
pockets of artists, nor has it done much to drive most file sharers into the arms of
authorized music services..
Hence, what we can do instead of this unnecessary roughness is building a voluntary
collective licensing regime as a mechanism that would fairly compensate artists and
rights holders for P2P file sharing. The music industry can form collecting societies
which offer file-sharing music fans the opportunity to get legit in exchange for a
reasonable and regular amount of money, for example $5/month. As long as these
subscribers pay their due, they get to download any music content that they like using
softwares of their choice. The revenues will then be shared amongst the right holders
of the music industry based on the popularity of their works. Universities can obtain
blanket licenses which allow their students to share music within the campus. Using
this method, everyone will benefit. Right-holders have their fair share of
remuneration, which increases depending on the the frequency of that music being
shared. The more competition in the P2P model, the more quality services are
developed. The more people upload, the more the tastes of people are suited. This
increased demand for content is as beneficial for copyright holders as for fans,
provided they are creative enough to adapt their business models to take advantage of
this freer environment.

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