Promoting the Useful Arts:

Past, Current, and Future Legal Ramifications of Digital Music Piracy



By Matthew C. Kelly
















Legal Issues of the 21st Century

Professor David D. Friedman


















© Copyright 2002





  1. INTRODUCTION………………………………………………………………...3

Copyright Law, Digital Music, and the Internet

  1. PART 1: The Past…………………………………………………………………6

The Technology: MP3s, Napster,  & the Rio

The Legal Ramifications: The Courts and Congress React

  1. PART 2: The Present……………………………………………………….……11

The Technology: Piracy Evolves: Pure P2P & CD-R

The Legal Ramifications: It’s Not the Crime, It’s If You Get Caught             

  1. PART 3: The Future……………………………………………………………...15

The Technology: The Recording Industry Goes To the Mattresses:

Technological Protection Systems

The Legal Ramifications: Moving Towards a Pay-Per-Use Society

  1. CONCLUSION………………………………………………..…………………25

Plans for the Future

  1. ENDNOTES……………………………………………………………………..29








Copyright Law, Digital Music, and the Internet

Article I, Sec. 8. Clause 8 of the US Constitution empowers Congress with the authority “to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”  The rights granted to authors and inventors by the Copyright Act of 1976 are in effect, a “bundle” of rights.  Among the rights granted to artists under 17 U.S.C. § 1,  are the traditional rights to reproduction, distribution of copies, the right to derivative works, and the right to perform the work publicly.[1]  In 1995, Congress also added the right to perform sound recordings by means of a digital audio transmission.[2] 

Recorded musical works comprise two distinct copyrights: the musical work and the sound recording.  Though the musical work is typically owned by the publisher, the copyright in the sound recording is claimed by the record company.[3]  The right to reproduce is the oldest right and applies to both sound recordings and musical works.  Copyright holders have the exclusive right to reproduce their works in “phonorecords,” which include cassette tapes, CDs, and hard drives or floppy disks containing MP3s.[4]  Any single phonorecord of music includes both the copyright of the sound recording and the musical work performed in the sound recording.[5] 

Additionally, musical works are exploited by performance.  A ‘performance’ can be public in two ways.  First, a performance can be public when one performs it in a public or semi-public place.  Second, and relevant to internet music transmissions, music can be publicly performed if the transmission is to the public by means of any device or process.[6]  Thus, streaming audio and digital downloads can possibly be considered performances (though the practical effects of figuring out whether they are will make little difference).[7]

However, copyright law is not absolute.  Congress must provide incentive for creators of such works (enabling creation) while at the same time protecting the legitimate access and dissemination of those works (protecting consumption).  Thus a delicate balance is fashioned between intellectual property rights and public access to the works protected.

For example, this balance is typified in the “fair use” doctrine.  Fair use, which was common law developed but later codified in the 1976 act, is an affirmative defense to a claim of copyright infringement.[8]  Fair use allows reproduction of protected works for certain purposes, including criticism, journalism, teaching, and scholarship.  Hence, fair use is in effect a limit upon copyright holder’s rights.[9]  Congress set out four factors to consider in determining whether a fair use exists:

(1)                     The purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2)                     The nature of the copyrighted work;

(3)                     The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4)                     The effect of the use upon the potential market for or value of the copyrighted work.[10]


The 1976 Copyright Act and the Fair Use doctrine of course came long before the prevalent use of the computer and digital technology for reproduction of protected works.  For example, prior to this technology if one was to make a copy of recording, it would have to be done through analog recording technology.  However, with each successive copy, the quality deteriorated, thus widespread copyright infringement of sound recordings (and video prior to the VCR[11]) was rare.  Conversely, digital technology allows for innumerable perfect or near perfect replications of the original work - an attractive feature to most consumers.  Coupled with the growing use of the internet as a means of dissemination, this technology threatens the balance between creation and consumption.  To be sure, nothing since the Gutenberg press has more dramatically tipped the scale  in favor of copyright infringement.  There are approximately 513.41 million people on the internet across the globe, 180.68 of whom are in the US and Canada.[12] 

The open and malleable nature of cyberspace, the veritable anonymity enjoyed by users, and the lack of central control, coupled with the ease of reproducing near perfect digital copies of copyrighted works, has produced widespread dissemination and sharing of digitally compressed music files, and hence the unauthorized copying, distribution, and transmission of protected property on a grand scale.  According to statistics from Ipsos Reid, a market based research company, fewer than 1 in 10 (8%) Americans over the age of 12 who have ever downloaded or streamed music off of the Internet have actually paid for this material. This translates into approximately only 4 million Americans within the current U.S. population (according to 2000 U.S. census figures).[13]  Moreover, over four-fifths (84%) of those who have downloaded music without paying report they would not be likely to pay for downloading music off of the Internet, even if there was no free music available.[14]  Given the fact that users of this technology can infinitely download,  copy, and disperse copyrighted works, the recording industry undeniably has some legitimate concerns.

While Congress has made several attempts to stem the tide of this mass infringement, the courts have similarly been forced to extend their intellectual property jurisprudence to the internet and digital technology in at attempt to “fulfill their constitutional imperative behind copyright law,”[15] resulting in several significant legal ramifications for copyright holders and copyright infringers which will be discussed in part.

However, if the current legal solutions prove inadequate in protecting copyright holders’ property, the use of technological protection systems (TPSs) to prevent infringement may surface as an attractive alternative for protection.  Inevitably, the introduction of some of these TPS measures into the realm of copyright law will produce several legal quandaries which will necessitate the careful attention of both Congress and the courts.  Some of these implications will be discussed in part as well.


PART 1: The Past

The Technology: MP3s, Napster,  & the Rio

Developed in 1987, and still the most popular medium for copying and distributing copyrighted music over the internet, is the MP3.[16]  “MP3” is the abbreviated form for Motion Picture Experts Group 1 Audio Layer 3.  This technology allows near perfect digital replication of music or video through a process of compression by reducing the sound data by a factor of twelve.[17]  Called “perceptual audio coding method,” the process of compression basically involves the removal of extraneous data which is included in the normal CD format but which is unperceivable to the human ear.[18]  The small and easily manageable size, coupled with the sound and picture quality, makes distribution over the internet of these files very popular.  Not only is the MP3 the preferred medium for the consumer, but also for the artists who wish to bypass the traditional and costly methods of distribution established by the records companies.[19]

In a relatively short amount of time, a person can “rip” a track from a CD onto their computer, convert the file into MP3 format, and upload it to a website for anyone who has access to the internet to download.  However, this “web-hosting” method is noticeable and makes the person hosting the site susceptible to civil or criminal prosecution.[20]  Solving the dilemma of web-hosting MP3s, while facilitating the ease of MP3 distribution, or “file sharing,” the development of Peer-to-Peer (P2P) services became an instantaneous asset.  These services allowed people connected to the internet to contact one another through a central server, view each other’s selection of MP3s, and then download, or copy, the selected file to their own respective hard drives.  The first and most notorious example of this type of system was Napster.  After downloading the free music sharing software, MusicShare, the user then can log onto the central computers (all 100 of them) and peruse the hard drives of other users which are compiled into a central database, or directory of MP3s, that which is indexed in real time.[21]  This music “sharing” function was the primary reason for Napster’s use and popularity.  Correspondingly, it was also the reason why Napster sustained the wrath of eighteen record companies.[22]

Adding to the popularity of the MP3 format came with the ability to listen to MP3s away from the computer.  Developed by Diamond Multimedia Systems, Inc., the “Rio PMP 300” MP3 player is a handheld portable digital music player, smaller in size than a deck of cards, which allows the user to download 32 megabytes (64 in some models) worth of MP3 audio files, stored on flash memory, for portable listening.  Clearly evident, the MP3 user was no longer tied to the home computer for music listening, and the Recording Industry Association of America (RIAA) took notice, filing a claim against Diamond seeking to enjoin the company from manufacturing and selling the devices.


The Legal Ramifications: The Courts and Congress React

            The Recording Industry Association of America (“RIAA”) filed suit against Diamond Multimedia Systems (“Diamond”) in the Central District of California in June of 1999, prior to the release of their MP3 player, “Rio,” alleging violations of the Audio Home Recording Act (“AHRA”).  The AHRA, passed by Congress in 1992, was a response to the introduction of digital audio tapes (DATs) and resistance by the recording industry.  Though DATs never became popular among consumers, Congress effectively banned the importation, manufacture, and distribution of any digital audio recording devices which do not conform to a serial copy management system.[23]  Thus, the threshold question to be determined in the Diamond case was whether a stand-alone device like the Rio was covered under the AHRA.  Because the Rio merely stores MP3 files which have been transferred from the computer’s hard drive, it does not make a new tangible copy of a digital recording.  Though copying software into the RAM of a computer constitutes a “copy” for the purposes of infringement, it is questionable whether the Rio’s transferring function can be similarly categorized.[24]  The Ninth Circuit rightly held that it does not, noting that the AHRA extends protection only to direct copying of digital music and to indirect copying from transmission; the Rio can do neither.  The sole purpose of the “flash memory” in the Rio is to store a temporary MP3 file for playback.  The Rio lacks any digital output capability and any independent recording capability, and thus can not facilitate the chain or piracy which the AHRA and the recording industry was concerned with.  So the Rio, like the VCR before it, sustained an attack by the industry, and successfully fashioned a foundation for the proliferation of digital audio players throughout the market, evidencing the continued trend of MP3 use.

One of the most prominent cases pertaining to this burgeoning brave new world of intellectual property law concerning digital piracy and the internet, was the case A&M Records, Inc. v. Napster, Inc.[25]  Responding to Napster very much the same way the movie industry responded to the VCR,[26] the music industry voiced concern about MP3s potential for preventing consumers from purchasing music at retail prices.[27]  Thus, eighteen record companies brought suit against Napster seeking injunctive relief, claiming direct and vicarious infringement.  However, unlike the good fortune enjoyed by Diamond, the Ninth Circuit filed its opinion in February of 2001, and found Napster and Napster users to be engaged in infringing activities, covered neither by fair use, or any affirmative defenses.

Napster argued that its users were engaging in non-commercial fair use activities including sampling and space shifting.  However, upon reviewing the four fair use factors, the court concluded to the contrary.  Regarding the first factor of the fair use analysis, the court reasoned that “a host user sending a file cannot be said to engage in personal use when distributing that file to anonymous requester and [that] Napster users get for free something they would ordinarily have to pay for.”[28]  The court specifically noted that the vast number of the copies being made, whether or not for the purpose of sale, suggested that Napster was inherently commercial in nature.  The court also quickly dismissed the second and third factors of the fair use analysis: nature of the use and the portion used.  The songs being traded were obviously creative in nature, and each song was being copied in its entirety by Napster users.  Lastly, in regards to the fourth factor of the fair use doctrine, the court determined that Napster did indeed harm the market by reducing CD sales among college students, and by erecting barriers to future sales.[29]

Regardless, Napster hoped to benefit from the Supreme Court’s ruling in Sony v. Universal, and the Ninth Circuit’s ruling in Diamond Multimedia, and their liberal application of the fair use doctrine, contending that the transferring of the already owned songs to another medium constituted “space-shifting.”  Space shifting is a legal extension of the fair use doctrine of “time shifting,” developed by the Supreme Court in the Sony case, which describes the transferring of copyrighted works for later personal use.   Irrespective of this, the Ninth Circuit court refused to extend this aspect of fair use, concluding that Napster, unlike the VCR or the Rio, concurrently involved the distribution or copyrighted material to the public.[30]  The court similarly rejected Napster’s sampling argument because Napster allowed users to obtain complete and permanent copies of music files.[31]

The Ninth Circuit found Napster liable for contributory infringement and remanded the case back down with instructions for an injunction.  Unlike the fair use analysis employed in Sony v. Universal¸ the court’s holding in Napster indicates that if the defendant has both knowledge or control of the infringing activity, it will be found liable for contributory infringement, regardless of substantial non-infringing uses.[32]  Despite this apparent victory for the record companies, however, piracy of digital music evolved even before the judge’s gavel was struck, leaving the court’s holding and the newly developed intellectual property jurisprudence in its wake.

Congress, prior to the Napster case, also responded to the building pressure from the music industry and the growing concern about technological piracy.  Primarily, in 1998, Congress enacted the Digital Millennium Copyright Act (DMCA), one of the most prominent and effective pieces of legislation.  The DMCA prescribed civil and criminal penalties for circumventing or selling products that circumvent technology which protect intellectual property, codified in  17 U.S.C. § 1201.  One of the more interesting elements of the DMCA, § 1201 distinguishes between unauthorized access and unauthorized copying.  The DMCA prohibits any selling or manufacturing of devices or methods used to circumvent either access or protections of copyrighted works.[33]  Undoubtedly, because willful violation of §1201  can result in criminal penalties, the DMCA will become a valuable supplement to future technological protection systems, including digital watermarking, digital fingerprints, digital envelopes, and trusted systems.

However, while the DMCA prescribes civil and criminal penalties for willful violators, the DMCA also carves out protection for online service providers (OSPs).[34]  Though some minor obligations are imposed on OSPs, they will remain insulated from monetary liability for transitory communications, system caching, storage, and search engines, thus effectively allowing OSPs to continue to operate as information conduits while avoiding the danger of contributory infringement.[35]


PART 2: The Present

The Technology: Piracy Evolves: Pure P2P & CD-R

Napsters’s progeny denotes a new era of internet content distribution technology referred to  as “pure peer-2-peer” (P2P).  Representing a substantial departure from the legally susceptible central-server format of Napster, new services such as Morpheus, AudioGalaxy, Gnutella, Limwire, iMesh, and KaZaA are a few of the 176 file sharing services now available.[36]  Similar to Napster, these services and their associated media players are free and can be downloaded from any number of sites on the internet.  Unlike Napster, however, which operated a “closed network” controlled by a central computer, there is no “Gnutella, Inc.” or “Audiogalaxy, Inc.” whose central computer can by shut down by court order, making these decentralized services completely unaccountable to copyright holders.[37]  Although the query service and list results look strikingly similar to their predecessor Napster, the file trading capacity is accomplished through a pure network of users, unassociated with any central computer and yet capable of independently sustaining the network.  As the chief executive of MusicCity’s Morpheus asserted, “It can’t be turned off, ever – someone could walk into our data center in downtown L.A., shut down every server we have, and the network would continue.”[38]  Moreover, internationally based companies like the Netherlands’s KaZaA, are completely outside the purview of U.S. copyright law.  To be sure, digital music piracy currently poses an invincible structure impregnable by any current legal methods, leaving copyright holders and the music industry with few options.

Furthermore, the recent proliferation of affordable rewritable CDs (CD-R) on the market has expanded the world of copyright infringement.  If one was to purchase a CD-R drive in 1986, he could spend in excess of a few thousand dollars, with the additional cost of spending twenty dollars or more for each blank CD.[39]  Currently however, a consumer could purchase a CD-R drive for approximately $200.0, though most computers are now sold standard with CD-R drives.  Also, rewriteable CDs only cost about one dollar each, or as little as fifty cents if one was to buy in bulk.  This not only provides the MP3 user the capability of recording their MP3 files from their hard drive to audio format on the CD for playback in any traditional CD player, but with the recent development of CD players capable of reading the MP3 files directly from the disk similar to a computer, the user can now download hundreds of files (songs) onto one CD.  Ostensibly, a user can place his entire music collection on less than half a dozen CDs costing approximately three dollars.  Economically speaking, this is very attractive to any computer user who in the past has had to spend thousands building their music library.  Indeed, digital piracy has been disseminated to the masses.


The Legal Ramifications: It’s Not the Crime, It’s If You Get Caught

            Although the music industry’s assault against Napster accomplished little but to accelerate the progress of technological piracy, it seems that the industry is one again taking legal action, this time against the pure P2P networks.[40]  However, legal remedies under the guise of copyright law may prove to be a bit more problematic this time around.

            Both the record and movie industries are joining forces to combat the seemingly unending flow of copyrighted material over the internet.  Recently, suit was filed on behalf of thirty music and film studios, naming, Grokster, and Consumer Empowerment B.V. as defendants.[41]  Again, claims of contributory and vicarious infringement are being alleged.  However, as already mentioned, because these P2P networks administer communication between users without any central control, halting the infringement by legal means may prove to be a moot point.  Additionally, some of these services, like Grokster, are already relocating off-shore to avoid any impositions imposed by U.S. copyright law.  Others, like are taking an alternative approach, restructuring their software altogether so as to fall outside the ambit of copyright law.  Steve Griffin of MusicCity stated, “we have a piece of software, that, by its very definition and performance, simply allows people to communicate with each other – what the user chooses to make available to the rest of the world from an information standpoint it totally their choice – we do not know what it is, we do not control it.”[42]  The music industry will undoubtedly argue that the facilitation of piracy among users is enough to hold MusicCity liable, however, because of the many non-infringing uses garnered by the software, a defense of fair use should overcome any claims of contributory or vicarious infringement.

Furthermore, criminal action[1] against infringers, by comparison, may prove even more troublesome then civil action because of the great difficulty in identifying the innumerable infringers for prosecution and because of the higher evidentiary standards in criminal actions.[43]  Unlike Napster, where ostensibly a warrant can be issued in order to compel the company to release a list of user names, the lack of centrality in P2P begets a lack of record keeping.  There is not “Gnutella, Inc.” maintaining records of users, hence there is nothing to compel by means of a warrant.[44]  Prosecution of those responsible for the services offered is equally unlikely because of the attenuated connection between those who developed the software and those who utilize the software for file-sharing.[45]  Making matters even more difficult for prosecutors, companies like Freenet affirmatively remove the identifying signatures from internet traffic.[46]  Moreover, the software reacts to attempted identification by distributing the data across more “nodes,” thereby making the attempt at identification a Herculean task.[47]  The end result is a legally insoluble quandary for copyright holders.  Nonetheless, where solutions in the legal realm cannot be had, technology will undeniably provide the alternative.


PART 3: The Future

The Technology: The Recording Industry Goes to the Mattresses: Technological Protection Systems[2]

            Given the music and recording industry’s uncompromising and unyielding approach in the past, it is highly unlikely that we will see it embrace the popular MP3 format and opt for a licensing scheme any time soon.[48]  More likely than not, the industry will continue to combat the proliferation of MP3s, however, instead of through the courts, it will be done through technological means.

            The music industry is already heavily involved in developing different technological methods, or speaking in terms of the DMCA and legal enforcement, “digital fences,”[3] to aid in the protection of their intellectual property.  Not only will these technologies facilitate the crackdown of unauthorized use, the legal consequences for breaching these remedies will also provide ample deterrence for would-be infringers.

One form of this technology is “digital fingerprinting.”  Just as our own fingerprints are unique to our respective selves, digital fingerprints can be injected into the code of each song, unique to itself, allowing for accurate identification of the songs, even despite misspellings.[49]  Internet service providers can then use these fingerprints as a means to block the flow of infringing materials across their systems, siphoning through only those materials which remain unprotected by copyright.  For example, in theory, everyone who has an account with AOL, and who may wish to distribute or send an unauthorized file to someone else, be it via email or a file sharing service like Morpheus, would be prevented from doing so, the file being screened out by the servers at AOL.

            Similarly, a “digital watermark” can be embedded permanently into a song or movie file as a stamp of authenticity, allowing for accurate identification by the copyright holders.  Because the DMCA places the burden on the copyright holder to monitor the internet for infringement, the watermark will facilitate the right holder’s ability to police the internet for authentic and unauthorized MP3s.[50]  For example, utilizing “web crawlers,” programs which methodically search throughout the Net for unauthorized copies, copyright holders can easily identify infringement.  However, because the absence of the watermark currently won’t affect the ability of the MP3 to be played either on a computer or MP3 player, a severe overhaul of the electronics industry would be necessary to ensure the use of only authenticated MP3s.[51]  Thus, practically speaking, watermarks will serve only to aid in monitoring the unauthorized use of MP3 for purposes of legal action.  However, though tracking and identification of infringers will be easier, given the expense and difficulties inherent in legal remedies as outlined above, this is not a probable alternative.

            More likely, effectively halting the flow of MP3s across the internet will be had through copy encryption, or “code protection,” thus preventing the original copying, or ‘ripping’ process from ever occurring.  This method has been utilized in Europe, and is expected to be employed by the five major record labels - Bertelsmann's BMG Entertainment, Universal's Universal Music Group, Sony Music Entertainment, EMI Recorded Music and AOL Time Warner's Warner Music Group.[52]  The process involves embedding minute errors onto the CDs or changing the location of data on the discs in order to prevent them from being played back on computers, though in theory the changes are presumed to be deciphered and corrected by regular CD players.

            The final method, and perhaps the most harrowing from the perspective of those involved in the free exchange of digital music across the Net, is the “trusted system.”[53]  At our current point in time, an accurate technological description of a trusted system remains somewhat elusive because the technological nature of a trusted system is broad and still undefined.  However, the basic premise is that the system will not allow any unauthorized access or action.  For example, your home computer is an open-ended programmable system.  To authenticate your system as trusted, you would have to employ cryptography, allowing a transaction of information only when your identity is verified.  This basic premise can be employed in a variety of manners, all aimed at allowing only authorized use of copyrighted works.  For example, the industry might establish a highly complex licensing system based upon trusted system technology.  Computer databases would retain the rights and privileges of users vis-à-vis information which is linked to hardware and software owned by those users and which recognizes and enforces those rights.[54]  Thus, one would own standard hardware issued by the distributor which would communicate his information to the central database for authorization, thus allowing for listening capability of a certain amount of music, depending upon your plan.  For example, say I purchase a monthly plan at $19.95, which allows me to listen to my choice of music capped at 200 songs.  I can listen, but I never own them, similar to use of a radio or cable television service, however, the digital clarity of the music would be similar to that of playing CDs.  Additionally, because the hardware which plays the music would be without recording capability, the only means by which I could hope to record the song is by holding a microphone up to the speaker to make an analog recording.  This of course is an oversimplified example of what could invariably become a complex though effective means of controlling copyrighted works.


The Legal Ramifications: Moving Towards a Pay-Per-Use Society

            One of the more interesting and indeed prescient aspects of the DMCA is title II, the Online Copyright Infringement and Liability Limitation Act.  Title II provides an exemption, or “safe harbor,” for Online Service Providers (OSPs).  Though the DMCA prescribes severe penalties for those who circumvent the digital fences employed by copyright holders, the act also limits the liability of internet service providers and search engines, classifying them merely as information conduits.[55]  First, the Act limits liability for both transitory communications and for system caching, thus information passing through ISPs cannot be considered “copied.”[56]  Second, the Act limits the liability of “information location services,” both search engines and internet directories which provide links to infringing sites.[57]  For liability to attach in this second example, the OSP must have knowledge of the infringement and must benefit financially from the infringing activity.  Third, the Act provides limited liability for web page hosting, or information residing on as OSP system.  However, the act also mandates a procedure for OSPs to follow in order to seek refuge in the safe harbor, which includes expeditiously removing infringing material once it is located.

Currently, some believe that the DMCA title II safe harbor for OSPs affords inadequate protection.[58]  Nevertheless, injecting the use of digital fingerprints or watermarks into the digital arena will undoubtedly create new and uncertain consequences for OSPs, not only in terms of increasing the OSPs’ obligations but also their susceptibility to liability under the DMCA.  For example, liability may attach in a copyright infringement action is thee ways: direct infringement, vicarious liability; and contributory infringement.  Clearly, the presence of these two technologies will greatly enhance the ability of OSPs to recognize infringing activity when it occurs, therefore, the requirement of “knowledge” for the purposes of tort liability under these three doctrines can be easily satisfied.  If OSPs wanted to avoid such liability they would have to employ substantial resources in order to shut down websites, remove links, stop searches, cancel subscriptions, and continually screen for infringing material passing through their systems.  Concurrently, copyright holders will be able to identify when OSPs have failed in their obligation to stop the flow of infringing materials, that which they had full knowledge of, thereby allowing for the attachment of liability relatively easily.  Moreover, OSPs also provide the sufficiently deep pockets for copyright holders to recoup their losses, as opposed to going after individual infringers.

The introduction of code protection onto CDs has already created hardware compatibility problems, for example, many consumers in the UK were forced to return CDs after being unable to play them in regular CD players.  Moreover, the original manufacturer of the compact disc, Phillips, has been adamant that the record companies include warnings that inform consumers that they are not purchasing CDs at all.[59]  However, the legal ramifications that will result from introduction of this protective measure will also be far reaching.  Not only does Phillips dislike the new copy protected CD, but the company plans on manufacturing a new CD burner which will be capable of reading the coded CDs, thus brining Phillips within the purview of the DMCA circumvention prohibitions, codified in 17 U.S.C. § 1201.  Under the Act, it is prohibited to make or sell devices for the purpose of circumventing copy protections.  However, Philips contends that the protected discs do not fall under the DMCA, since they restrict the playback of music, not copying itself.[60]  Nonetheless, because of the broad statutory language of the DMCA, some contend that any technological protection which is implemented to control the access to the protected work will come within the meaning of § 1201, thus Phillips’ device will be construed as a circumvention.[61]

Irrespective of the forthcoming legal battle between Phillips and the record companies, the immediate practical effect of this code protection system will be to thwart legitimate fair use.  The personal computer has recently become an integral component for the purpose of listening to music.  Moreover, the introduction of MP3s and portable “skip-free” devices such as the Rio have only added to the popularity of utilizing computers for listening purposes.  However, the introduction of copy protection will prevent users from legitimately listening to their music.  This is not only antithetical to the purpose of fair use, but indeed copyright law in general.  Copyright law effectuates a balance between the owner’s exclusive right of distribution and the consumer’s right of access and enjoyment.  Neither of these rights are absolute however.  For example, though the copyright holder has the exclusive right to distribution, reproduction, and right to derivative works, these rights are buttressed by the doctrine of fair use.  Though the doctrine is vague and difficult to predict in its application, the Supreme Court in the Sony case established that private noncommercial use constituted fair use, thus preventing the burning of tracks into MP3s in order to prevent the proliferation of file sharing on the Net effectively prevents the consumer’s right to fair use.

Moreover, the above example of introducing code protection represents but one aspect of the larger consequence that will result from the convergence of technological protection systems (TPSs) with the growing use of digital media, namely, overprotection and the demise of personal use.  Not only will use restrictions in the real world and internet incur from TPSs, but with the legal reinforcement of the DMCA, TPS users can “bootstrap” unprotected material, or material that receives “thin” copyright protection, onto an enforceable legal right to prevent access.[62]  This dual regime – enclosing the pubic domain and restricting fair use and reinforcement by the DMCA – is unprecedented in intellectual property law.[63]

For example, the “trusted system” will effectively create a “pay-per-use” society, dismantling any remaining vestige of the fair use or first sale doctrine.  Songs will not be sold, but rather licensed on a song by song basis.  Compact discs will be replaced by digital distribution to generic “jukeboxes” linked by the Net to a central database of songs managed by a publisher or record company.  An individual authenticates himself to the jukebox and is granted access after parting with personal information.  The user sets his preferences and then the requested songs are streamed to the box for the individual to listen to.  Not only will analog copying render an imperfect copy, but the presence of such a copy will obviously alert the proper authorities to infringement.  But it doesn’t end here.  If the individual user were to hook up his box to an amplification system for a party or the like, listening posts strategically placed throughout and monitored by the ASCAP would effectively put a halt to such unpaid use.[64]  This Orwellian style of music distribution will be typical in an era of trusted privation, and one which offends the purposes of intellectual property protection.

The doctrine of fair use has its largely undefined roots in the Constitution, though Congress has later codified it in § 107 of the Copyright Act, and the Supreme Court has subsequently broadened its application.   Fair use has operated to balance the rights of artists with the rights of consumers for a long period of time with relatively few complications.  Indeed, the introduction of pure P2P file sharing services have temporarily tipped the scales beyond legitimate fair use, however, TPSs by their very nature do not expire and will never recognize any fair use application.  Moreover, because the DMCA gives TPSs legitimate legal authority, our society will effectively shift to one of a “pay-per-use” regime, exemplified by the trusted system model outlined above.

A pay-per-use scheme is inherently adverse to the basic theoretical framework of intellectual property protection.  Personal use has its justification in many of the theoretical frameworks employed for the enforcement of intellectual property regimes.[65]  The Copyright and Patent Clause in the Constitution suggests a utilitarian spirit, presenting a set of entitlements which provide incentives, balanced against public consumption.[66]  The grant of entitlements to authors and inventors, or limited monopolies used to “promote the science and useful arts,” are designed to serve broad societal goals.[67]  Thus, the doctrines of fair use, first sale, and idea-expression dichotomy in copyright law have redistributive effects intended to serve this broad societal interest.  Similarly, in patent law, entitlements are limited in scope and duration, thus protected works are returned to the public domain to facilitate progress.[68]  None of the protection currently granted authors and inventors are absolute, however, unencumbered TPSs and digital fences will soon change this.

Nonetheless, when drafting the DMCA, Congress recognized the need for exceptions in order to ensure that fair use and personal use are not stymied by strong digital fences.[69]  The DMCA contains three provisions dedicated to ensuring the protection of fair use, though they are not entirely inclusive.  Section 1201(c) contains the first two: “(1) Nothing in this section shall affect rights, remedies, limitations, or defenses to copyright infringement, including fair use, under this title…(4) Nothing in this section shall enlarge or diminish any rights of free speech or the press for activities using consumer electronics, telecommunications, or computing products.”  Next, section 1201(a)(1) requires the Register of Copyrights to conduct an administrative rulemaking procedure with respect to which the DMCA has adversely affected users ability to make noninfringing uses. 

Unfortunately, the courts thus far have failed to see the importance of these three provisions in ensuring legitimate fair use.  For example, in the case Universal City Studios v. Reimerdes[70], involving a company that posted a decryption program designed to break CSS, the TPS system used on DVD players to prevent home users’ access to DVDs on non-licensed systems, the court held that one violates the DMCA even if the circumvention measures are absolutely necessary to facilitate fair use.[71]  The court not only failed to make mention to § 1201(c), but the effect of their holding is to derail a constitutionally protected right.  Despite the strong presumption that these sections are intended to limit the breadth of the DMCA, courts have been slow to react.[72]

Moreover, section 1201(a)(1) is a rulemaking provision which requires publication of a class of copyrighted works whose fair use has been adversely affected by the DMCA.  The determination of those affected works is to be made by the Register of Copyrights two years after the statute becomes effective.  This provision basically operates as a “fail safe” mechanism, though several problems have arisen.  First, the statute only applies to the prohibition of circumvention.[73]  Thus, the DMCA still applies to the manufacture and distribution of devices.  For example, if it is determined that Phillips manufacturing of their new CD burner facilitates the narrow exception of this provision, it will nevertheless be liable – the exemption is in name only.

Ultimately, the DMCA provisions will only protect users of specific types of works.  “The fit between what the provision seeks to protect (fair use) and the provision’s criterion for protecting it (the DMCA’s adverse effect on the use of a class of works) is a poor one.”[74]  Those wishing to make fair use of digital works are unlikely to find protection in the DMCA exemptions.

Irrespective of the broad application of the DMCA and the fact that courts have yet to apply the 1201(c) safeguards, courts have traditionally protected fair use and have expanded the public domain, thus it is likely that the DMCA anti-circumvention provisions will be eventually narrowed in their application or will be struck down in whole.  Because Congress has neglected to adequately consider the restrictions that the DMCA places on constitutional rights to fair use and personal use, courts will be required to evaluate the application of technological protection systems and digital fences on constitutional grounds.  Without such protection, content and rights holders will be able to expand their monopolies to the detriment of the public simply by supplanting legal enforcement with technological enforcement.[75]



Plans for the Future

There are a few alternatives to the current battle between consumer fair use and rights holders’ protection of intellectual property.  The first course of action, although highly unlikely given the industry’s past record, is to allow for a “deregulation” of the industry and let the current free exchange of MP3s over the Net to continue.  Just as the VCR didn’t destroy the movie industry, or the DAT and ADAT didn’t curtail consumers’ purchase of audio tapes and CDs, it is equally unlikely that MP3 file sharing will have any dramatic impact on music sales.  Consumers still retain a predilection for the original work and mainly use MP3s to sample music before they purchase.[76]  In fact, it is possible that some consumers would never purchase CDs unless they first had the opportunity to sample the music.  I myself have purchased several CDs after first downloading a few MP3s in order to determine the quality of the CD in its entirety.  Of course, what is at concern here is maintaining the viability of the rights holders’ market.  If CD sales continue despite the continued use of file sharing across the internet, the industry’s best approach may be passive-aggressive monitoring.  Moreover, just as people haven’t stopped attending the movies despite the existence of VCRs and now DVD players, people will not stop attending live concerts.  If a small monetary void is created by file sharing, alternative forms of income including concerts, apparel, and fan club memorabilia, can act to supplement losses in CD sales.  Currently, most artists realize the bulk of their revenue through live performance, with revenue from CD sales going to the record companies and distributors.

Second, the record industry can embrace the MP3 technology and provide its own methods and channels of distribution.  Two recommended approaches are: (1) set up an industry authorized web site; or (2) adopt a shareware distribution system.[77]

  1. Industry Owned Website

Similar to or, the recording industry, possibly through SDMI,

can establish a site that will allow users to download individual MP3s which are authorized by the participating labels.  The industry can either charge per MP3 or have unlimited downloading for a flat monthly rate.  Then, using digital fingerprints, the industry can ensure that the files aren’t then passed back over the Net to other users.  However, given users affection for unauthorized file sharing despite the existence of legitimate sites, and of course the record industry’s unyielding approach to new technology, this may not be a viable alternative.

  1. Shareware Approach

Shareware is a method of distribution that has been utilized by computer

programmers for quite some time.  After downloading a free, functional version of a program, users may register the program if they are happy with its performance.  Upon giving of some consideration, they will then get either an updated version of the software, or other materials.  Some crafty programmers have even installed “sunset” code into their software, thus after a certain trial period, usually about twenty one days, the program ceases to function, or is erased from your hard drive, unless you register.  This method of distribution is probably more suited for musicians attempting a grass roots approach to disseminating their music, rather than a big five record company, however.  Artists could share ware a portion of their CD, then if the consumer is happy with the music, they can download the rest of the CD for some form of consideration.  Musicians may also be able to entice buyers by offering merchandise or fan club information.  Moreover, consumers who appreciate the music or become fans of the band may wish to show their appreciation and support the efforts of the band by registering their copies. 

However, this independent method of distribution by artists will likely meet with much resistance from the recording industry.  Currently, the industry brings in approximately $ 7 billion in domestic sales annually.[78]  If a significant portion of artists decide to adopt a shareware approach, and thus receive profit directly, the music industry will be effectively removed from the equation.  This is already happening, with artists such at the Beastie Boys, David Bowie, and Public Enemy wishing to bypass completely the means and modes of the industry.  This will likely prove to be more of a loss for the industry than the current file exchanging occurring now.

            Ultimately, what we may end up seeing is a dual regime of music distribution: the current one where the record industry continues to exert its control, relying upon TPSs and legal enforcement by the DMCA to ensure that pirated copies of NSync, Britney Spears, and O-Town don’t end up on the Net; and independent means of distribution like shareware, affording those artists who lack the commercial viability that the record companies desire, the opportunity to reach a broad audience.

            Regardless of the means employed to stem the tide of digital music piracy, it is clear that application of technological protection systems and digital fences to the current market will also implicate with it the abuse of consumer rights.  An equilibrium needs to be reached between enforcement of right holders’ ability to commercially exploit their work product and the utilitarian doctrine of consumer fair use.  Moreover, current interpretation of the Digital Millennium Copyright Act by the courts will only facilitate the evisceration of fair use by providing digital fences with legal reinforcement, protecting works that may only enjoy a thin layer of rights.  This coalition between TPSs and the DMCA will essentially move our society to one of pay-per-use, that which is wholly antithetical to the purpose of intellectual property protection: promotion of the useful arts.  Furthermore, because technology will continue to outpace both congressional and common law solutions to the problem of the digital piracy, the conflict over digital music on the internet will most likely be fought through a series of battles involving protection methods and subsequent circumvention.  Unfortunately, the consumers may be the ultimate losers amid this digital skirmish.



[1] It should be noted that criminal prosecution of online infringers will likely raise some interesting 4th Amendment issues as far as peoples’ hard drives are implicated and their expectation of privacy is concerned.  This is a little beyond the scope of this thesis however.

[2] A number of record companies and internet technology companies formed a group called Secure Digital Music Initiative (SDMI) in 1998 for the purpose of developing a unified standard for the distribution of digital music.  Thus far we have not seen any uniform system arrive, so this note will concentrate on the plausible technologies to be employed and their legal consequences.


[3] Some like to classify the DMCA as a technological enforcement law rather than a copyright law.

[1] See 17 U.S.C. § 1

[2] Paul Veravanich, Rio Grande: The MP3 Showdown at Highnoon in Cyberspace, 10 Fordham I.P., Media

& Ent. L.J. 433, 441 (2000)

[3] Niels Schaumann, Copyright Infringement and Peer-to-Peer Technology, 28 Wm. Mitchell L. Rev. 1001,


[4] Anthony Reese, Copyright and Internet Music Transmissions: Existing Law, Major Controversies,

Possible Solutions, 55 U. Miami L. Rev. 237, at 240.

[5] Id.

[6] Id. at 244.

[7] Id. at 259.

[8] Sara Beth A. Reyburn, Fair Use, Digital Technology, and Music on the Internet. 61 U. Pitt L. Rev. 991


[9] See Id. at 992

[10] See 17 U.S.C. § 107

[11] See Sony Corporation of America v. Universal City Studios, 464 U.S. 417 (1984).

[12] NUA Internet Statistics,

[13] Ipsos Reid,

[14] Id.

[15] Reconciling Napster with the Sony Decision and Recent Amendments to Copyright Law, 39 AM. Bus. L.

J. 57 (2001)

[16] A&M Records v. Napster, Inc., 239 F.3d 1004, 1011 (2001).

[17] Paul Veravanich, Rio Grande: The MP3 Showdown at Highnoon in Cyberspace, 10  Fordham I.P., Media

& Ent. L.J. 433, 441 (2000)

[18] Brendan Schulman, The Song Heard Round the World: The Copyright Implications of MP3s and the

Future of Digital Music. 12 Harv. J. Law & Tec 589 (1999)

[19] See Id. at 591.

[20] In 1999, a student at the University of Oregon pled guilty to criminal copyright infringement for posting

software and music on an internet site using the University’s server.

[21] Reconciling Napster with the Sony Decision and Recent Amendments to Copyright Law, 39 AM. Bus. L.

J. 57, 61 (2001)

[22] See Id. at 64.

[23] Paul Veravanich, Rio Grande: The MP3 Showdown at Highnoon in Cyberspace, 10 Fordham I.P., Media

& Ent. L.J. 433,

451 (2000).

[24] See Schulman, supra note 13, at 612

[25] A&M Records v. Napster, Inc., 239 F.3d 1004, 1011 (2001).

[26] Sony Corporation of America v. Universal City Studios, 464 U.S. 417 (1984)

[27] Reconciling Napster with the Sony Decision and Recent Amendments to Copyright Law, 39 Am. Bus.

L.J. 57 (2001)

[28] See Napster at 912.

[29] The Peer to Peer Revolution: A Post-Napster Analysis of the Rapidly Developing File-Sharing

Technology, 4 Vand. J. Ent. L. & Pract. 93, 98 (2002)

[30] Id. at 99.

[31] Id.

[32] Reconciling Napster with the Sony Decision and Recent Amendments to Copyright Law, 39 Am. Bus.

L.J. at 83 (2001)

[33] See Schulman, supra note 13, at 638.

[34] Id. at 638.

[35] Id. at 641.

[36] Joseph A. Sifferd, The Peer to Peer Revolution: A Post-Napster Analysis of the Rapidly Developing File-

Sharing Technology, 4 Vand. J. Ent. L. & Pract. At 104 (2002)

[37] Id. at 105.

[38] Chris Taylor, The Next Napster; Free Online Music is Back, in the Indestructible Shape of Morpheus,

TIME, Fall 2001, at 32.

[39] Jessica Toney, You’ve Got Mud on Your Face: Have MP3s Turned the Middleman Into Roadkill? 22

Hastings Comm/Ent L.J. 127 at 147. (1999)

[40] See Sifferd, supra note 31, at 106.

[41] Id. at 107.

[42] Id.

[43] Aaron M. Bailey, A Nation of Felons?: Napster, the Net Act, and the Criminal Prosecution of File-

Sharing, 50 Am. U.L. Rev. 473, at 513 (2000)

[44] Id.

[45] Id.

[46] Id.

[47] Id.

[48] See Toney, supra note 34, at 147.

[49] See Sifferd, supra note 31, at 107.

[50] See Veravanich, supra note 2, at 470.

[51] See Bailey, supra note 38.

[52], (January 17, 2002, 4:45 PM PT).

[53] John R. Therien, Exorcising the Specter of a “Pay-Per-Use” Society: Toward Preserving Fair Use and the

Public Domain in the Digital Age. 16 Berkeley Tech. L.J. 979 at 989 (2001).

[54] Jonathan Zittrain, What the Publisher Can Teach the Patient: Intellectual Property and Privacy in an Era

of Trusted Privacation. 52 Stan. L. Rev. 1201 at 1202 (2000).

[55] See Schulman, supra note 13, at 641.

[56] Id.

[57] Id.

[58] Jennifer Sylva, Digital Delivery and Distribution of Music and Other Media: Recent Trends in

Copyright Law; Relevant Technologies; and Emerging Business Models. 20 Loy. L.A. Ent. L. Rev. 217 at 223 (2000).

[59] See Id, supra note 47.

[60] Id.

[61] Id.

[62] See Therien, supra note 48, at 993.

[63] Id.

[64] See Zittrain, supra note 49, at 1213.

[65] Deborah Tussey, From Fan Sites to File Sharing: Personal Use in Cyberspace. 35 Ga. L. Rev. 1129 at

1169, (2001).

[66] Id.

[67] Id. at 1172.

[68] Id.

[69] See Therien, supra note 48, at 1017.

[70] Universal City Studios v. Reimerdes, 111 F. Supp. 2d 294 (S.D.N.Y. 2000).

[71] See Therien, supra note 48, at 1017.

[72] Id. at 1021.

[73] Id.

[74] Id.

[75] Id. at 1042.

[76] See Veravanich, supra note 2, at 472.

[77] Id.

[78] Id. at 476.