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Commentary--Entertainment Industry on the Warpath

by Bob Starrett

Ten years from now, we will likely look back and both laugh and shudder at the current goings on in the legal arena concerning copyrighted content. This month has been especially foreboding with action on all fronts. In New York, Federal District Judge Lewis Kaplan found that 2600.com''s links to sites that provided the short, yet feared, DeCSS code or program were a violation of the Digital Millenium Copyright Act. 2600.com proprietor Eric Corley, never one to roll over, immediately removed the links from his site, but not the site addresses. DeCSS is now an extra copy and paste step away. Even better-and indicative of the futility of the suit and attempts to stop what many see as free speech-is Corley's newest link, to the Disney search engine, where he suggests that you merely type in DeCSS and you will find more links than Corley had on 2600.com in the first place. Court order or no, DeCSS is just seconds away from anywhere in the world.

Other pending matters between Internet entrepreneurs and the entertainment industry continue apace. Although they settled with Sony last week, as of this August 24 writing, mp3.com was still scheduled to go to trial on Monday, August 28 in Federal District court in Manhattan. The issue is not liability, which has already been decided, but damages. Judge Jed Rakoff ruled that under federal copyright law, a CD was a compilation and thus damages would be decided by a jury based on the number of CDs that were on mp3.com's MyMp3 service (which lets users register the CD titles they own and stream any of the ones in mp3.com's catalog whenever they choode), not the total number of songs on all the CDs. This effectively reduces mp3.com's damage exposure by a factor of 12 (assuming an average of 12 songs per disc), and with the four other plaintiffs having settled, many fewer CDs are at issue. If the jury finds that the infringement was willful, then the damages can be greatly increased. The jury must then set the damage amount. If the infringement is found to be non-willful, damages could range from $750 to $30,000 per infringement. If the violations are found to be willful, the damages could be as high as $150,000 per CD. Mp3.com has already settled with Sony, Time Warner, EMI Group, and Bertelsmann, reportedly paying each company $20 million cash, plus a promise of royalties in the future. In return, mp3.com may now legally use the content owned by these companies on it's MyMp3 service. Universal might do well to settle before trial, too. The RIAA has made mp3.com the second most recognizable music site.

The biggest digital music battle, however, is yet to come. Napster scares the record industry no end; but even the much-celebrated success of a temporary injunction granted by Federal District court judge Marylyn Patel in San Jose, an injunction that would have effectively shut down Napster's servers and quickly put them out of business, lasted only a day before a Federal appeals court stayed the order, citing substantial issues of first impression. In other words, it was not exactly clear to the appeals court that the RIAA argument accepted by Patel was correct. A decision by the Court of Appeals is expected in October, Napster remains available and all the publicity has now vaulted it into the top ten most-visited Web sites.

And if you think they are hard at work fitting that second shoe into their mouth, you are right. At the Americas Conference on Information Systems 2000 last week, Sony Pictures Entertainment U.S. senior VP Steve Heckler, either trying to show strength, or projecting the unparalleled arrogance that got the record companies in the mess they are in today, stated, "Sony is going to take aggressive steps to stop this. We will develop technology that transcends the individual user. We will firewall Napster at the source-we will block it at your cable company, we will block it at your phone company, we will block it at your [ISP]. We will firewall it at your PC."

Nice PR skills, Steve. Good luck getting your firewall on my PC.


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