Legal Issues
The Internet has changed the nature of entertainment and information distribution. Prior to the Internet, people illegally copied music from each other and “mixed” their own tapes with selections from multiple sources. They also shared books and copied articles for each other. These copying efforts were done one at a time. Currently songs, databases and computer source code posted on the Internet are available to millions of people as opposed to one by one. Thus infringements on copyrights can have an enormous impact. The question of what constitutes property in cyberspace is at the center of Napster, Mp3.Com, Incorporated and other law cases encompassing information and databases on the Internet.
The MP3 case involved MP3.com copying music on its servers and letting millions of users who already owned the music listen to it free on computers or devices capable of playing MP3 files. For example, owners of CDs played the CDs to prove they owned a copy and then MP3.Com gave them access to play the same titles from any location. However, the Record Industry Association of America (RIAA) sued MP3.com and claimed that people could get around the requirement that they must own the CD to download it from the MP3.Com site. The courts ruled against MP3.com and fined it $25,000 per disc it copied for copyright piracy. After the judgment, MP3.com made agreements with the four largest record companies to sell and store CDs online. It also offers a free service for users willing to listen to ads. By 2001, it was operating at a loss and was acquired by music and entertainment company Vivendi Universal SA, which plans to use its technology for a new online music subscription service called pressplay. Smaller independent music companies that did not participate in the preceding suit are suing MP3.com for copyright infringement.
The Napster case was different than the MP3 case because Napster did not directly copy music. It enabled others to download music using Napster's file-sharing program. It operated similar to a search engine that enabled people to find free music from many sources. Napster kept a centralized list of music available on other people's computers. People at the Napster site could download music from any computer in the central catalog that was turned on.
In 1999 the Recording Industry Association of America and, in 2000, two recording artists sued Napster for copyright infringement. The courts ruled against Napster, which had claimed because it was acting as an Internet service provider and because it was not making copies, was exempt from the copyright infringement rules. The court ruled that Napster must stop enabling music files to be shared. The record companies are now suing other file-sharing companies such as Gnutella and Aimster whose file-sharing services do not keep central catalogs of music on other's computers.
According to Stephen Chow, a partner at the Boston law firm of Perkins, Smith & Cohen, LLP, the Napster case has privacy implications. Both copyright owners and pirate-catching services are sniffing (monitoring) the IP (Internet Protocol) addresses of people using Napster-like music services. In Belgium, police went after people for illegally downloading music. Copyright owners have asked Internet service providers to block service to music-sharing sites under the Digital Millennium Copyright Act (see “The Digital Millennium Copyright Act (DMCA)—Royalties for Radio over the Internet” for details on the act).
Post-Napster Music Industry Online Efforts
Edgar Bronfman, Jr., vice chairman of Vivendi Universal, testified before the United States House Subcommittee on Intellectual Property that the industry had been hurt by free peer-to-peer music from sites such as Napster. No statistics have been published to prove Mr. Bronfman's claim. According to Recording Industry Association of America statistics, revenue of CD singles decreased 35.8% from 1999 to 2000 from $222.4 million to $142.7 million. However, revenue of CD albums increased 3.1% from $12.8 billion to $13.2 billion in the same period. Moreover, sales of singles, which accounted for less than 1% of music sales in 2000, started dropping in 1998, before Napster's May 1999 founding.
Music critics and newspaper columnists have stated that high prices and the fact that albums often contained only a few popular songs hurt CD album sales. The model of distributing music from the Internet is having a major impact on business plans. The largest music companies are starting Internet-based digital distribution organizations. The following three arrangements have been announced:
Bertelsmann agreed to a partnership with Napster where users pay to download music from Napster's site.
AOL Time Warner, Bertelsmann's BMG unit, RealNetworks and EMI Group started MusicNet to sell music online using encryption and compression from RealNetworks, Inc. and distributed via AOL and RealNetworks. Only music from these companies, about 40% of the market, will be available with MusicNet.
Vivendi Universal and Sony have started pressplay, which will be distributing music on Yahoo!'s site and other sites that license its technology. Pressplay will use MP3.com's technology. Only Vivendi and Sony music, about 47% of the market, will be available.
Because this is a new form of distribution, new terms need to be set up with artists. Agreements with individual performers, songwriters and music publishers are being worked on by the preceding companies. However these agreements are structured, digitally downloaded individual songs will give consumers more choices on which songs to collect. It also gives them an opportunity to inexpensively listen to new artists. The industry has a new way to promote and distribute new recordings.
The Digital Millennium Copyright Act (DMCA)—Royalties for Radio over the Internet
In October 1998, the U.S. Congress passed the Digital Millennium Copyright Act (DMCA). The Act was designed to implement World Intellectual Property Organization (WIPO) agreed-upon issues. It also requires Webcasters to pay royalties for music broadcast over the Internet. It made it a crime to circumvent anti-piracy measures built into commercial software.
It also includes a provision that Internet service providers aren't liable for customers who use their network service to illegally copy files. It granted “safe harbor” to Internet service providers that provide the network over which users illegally copy files. However, the act has a provision whereby copyright owners can obtain a subpoena ordering a service provider to disclose the identity of a subscriber allegedly engaging in infringing activity. The service providers must also terminate accounts of repeat infringers. ISPs are not liable for penalty as long as they don't know of copyright infringement activities and don't profit from them. In the Napster case previously described, Napster claimed that it was an Internet service provider and thus not liable for infringements by people that used its software.
The Digital Millennium Copyright Act also includes provisions related to songs broadcast by radio stations over the Internet. The Act limits the number of songs by specific artists and albums that Webcasters can play within given blocks of time. The DMCA also prohibits Webcasters from telling listeners the name of the next song to be played.
Anti-pornography Laws and Freedom of Speech
Freedom of speech rights sometimes clash with people's desire to protect children from pornography on the Web. For example, the 1998 Children's Online Privacy Protection Act (COPPA) makes it a crime to place objectionable material on the Web where a child may view it. The law specifies that the material can be on the Web but that sites must require users to use a credit card or access number as proof of age to view the material. The law has never been put into effect because a lower court granted the American Civil Liberty Union's request to prevent its taking effect. The United States Supreme Court will rule on the constitutionality of the law in October 2001.
Another Act where freedom of speech intersects with child pornography issues is the Children's Internet Protection Act (CIPA), which the United States Congress passed in 2000. It requires that schools and libraries that participate in certain federal subsidy programs install “technology protection measures” to block access to obscenity, child pornography and material harmful to minors on all of their Internet access terminals. The Act also requires Internet safety policies preventing minors from accessing email, unlawful activities online and chat. The American Civil Liberty Union (ACLU) and the American Library Association (ALA) have stated their intention of challenging the constitutionality of CIPA. (The ACLU has stated that they may only initiate action against the library regulations because schools have a quasi-parental role.) A three-judge panel appointed by the Third Circuit Court of Appeals will hear the case in the December 2001 time frame. If CIPA is declared constitutional, libraries and schools have until July 2002 to implement CIPA requirements. They must declare that they will participate in the blocking or evaluate if they will participate by October 28, 2001. If the law is put into force, libraries that don't implement filtering will lose federal funding.
In expectations of this Act, Peacefire, a civil liberties group based in the United States, tested the most widely sold censorware programs in October 2000. It found error rates of between 20% and 80% where the programs blocked sites that did not contain pornography. One problem with filters is that they cannot determine the context in which language is used. The filters block topics such as anatomy discussions and medical treatments as if they are pornography.
Some countries have broad Internet restrictions. For example, in Saudi Arabia, all residents are denied access to pornography and defamatory statements about the royal family. Singapore and the United Arab Emirates monitor Internet traffic by forcing it all to go through a central gateway. These countries and other countries block traffic from certain Internet addresses. According to the article, “Punching Holes in Internet Walls,” published in The New York Times on the Web, 26 April 2001, by Jennifer Lee, 20 countries significantly restrict Internet access. Residents of these countries often find ways to access these sites by signing up with ISPs such as SafeWeb that encrypt data to and from SafeWeb servers.
Having to create different Web sites for a variety of countries is a problem particularly for portals that appeal to residential consumers. The following is a quote from Vermont Democratic Senator Patrick J. Leahy, Chairman of the Senate Judiciary Committee, about the best way to regulate the Internet internationally. The quote appeared in the article, “Continents Clash on Content,” published in The New York Times on the Web, 18 April 2001, by Amy Zuckerman:
The temptation of government is to apply rules on the Internet that they wouldn't do otherwise. With so many countries over there, you're not going to get consensus by accident. We have to be technologically neutral the way we have with telephone lines and digital signatures, but when you get into the area of content there's a major problem of the differences from country to country… The bottom line is, if you have criminal content, nail the criminal. Don't close down the Internet.
Filtering Software—Policing Corporate Browsing and Email
To ensure that employees use the Internet for work-related tasks, organizations as well as governments block particular Web sites. They use software that blocks URLs to known pornography, hate/racism, sport, gambling, religion and weapons sites. Suppliers of Internet filtering software use automated search tools that find sites with pornographic pictures, racist symbols and Web content related to the preceding topics. Other filtering software screens incoming Web pages and sends warnings to staff that pop up on their computer screens while they are viewing, for example, a travel site. The message on the screen tells the employee that the site they are viewing is not an appropriate work-related site.
In addition to blocking and screening Web sites, enterprises such as financial institutions use software to monitor email for compliance with Security and Exchange Commission (SEC) compliance. For example, they look for insider trading and other illegal activities. Compliance with Equal Employment Opportunity Commission (EEOC) requirements is another reason organizations filter out offensive Web sites. For example, in May 2001, the EEOC ruled that a Minneapolis library exposed staff to a hostile work environment by allowing patrons to access pornography.