NAPSTER'S SIDE OF THE STORY

A Q&A WITH LAURENCE PULGRAM
  1. Metallica argues that, even though Napster has non-infringing uses, most of the MP3 files shared by Napster users are copyright protected. So how can Napster be justified?
  1. Let's start with the Supreme Court's decision in the Betamax case. That case rejected the entertainment industry's effort to keep the VCR off the market. The Supreme Court has said that copyright is first and foremost about "promoting progress" in the arts and sciences; monetary rewards are secondary. Put another way, copyright exists in the United States for the benefit of the public, and the public interest requires that new technologies be made available where they have potential non-infringing uses. That's clearly the case with the peer-to-peer file-sharing breakthrough that Napster created. Let me point out just a few of those non-infringing uses.

    First, consider distribution of new bands and new music. Metallica seems happy to pull up the ladder after they reached the top. But the fact is that only a tiny fraction -- maybe 2 percent -- of all musicians get recording contracts with the big labels. The rest are out there struggling to build a career. The little guys are competing against huge corporate conglomerates to capture fans, but they don't have the resources to promote themselves on radio, on television or on tour in the current system. Napster gives new artists a way to distribute and promote their music directly to a huge community of fans worldwide. In fact, in just the last few weeks, Napster has had more than five thousand artists sign up to approve Napster's distribution of their music.

    Second, Metallica itself has shown how effective grass-roots promotion can be, if given a chance. Metallica built its name through word-of-mouth, bootlegs and underground tape distribution. So did the Grateful Dead, Phish, Dave Matthews and others. Ironically, Metallica now says it wants Napster to allow fans to share Metallica bootleg recordings, but to prevent fans from sharing Metallica's studio recordings. So Metallica acknowledges Napster's utility for spreading promotional materials. And yet, it seeks to deprive everyone of those opportunities by trying to shut the system down.

    Third, what about the rights of fans who have already legally bought a Metallica album, or any other album, and just want to download an MP3 copy to play through a computer or to compile play lists from various CDs? Is Metallica saying those fans don't have the right to download that MP3 copy? The law entitles those fans to make that duplicate for their own non-commercial enjoyment using Napster. These are just a few of the uses of the Napster system that are non-infringing. There's no justification for shutting down Napster and throwing out the baby with the bath water.
  1. So why doesn't Napster just screen out infringing uses from non-infringing ones?
  1. How? Napster doesn't know what's in the files its users are sharing. It does not monitor its users' activities. And the Digital Millennium Copyright Act ("DMCA") says an Internet service provider like Napster has no duty to monitor or seek facts showing infringing activities. Without a claim of infringement from a copyright holder, Napster has no way to separate infringing uses from authorized and fair ones, such as when a user copies an MP3 song he already owns on CD.

    In fact, Metallica itself has shown how impossible it is to screen selective files from the Napster system. Metallica asked Napster to block 317,000 fans after sending Napster a list of the screen names of users it says were infringing. But over 30,000 of Metallica's 317,000 blocked fans submitted statements swearing they were identified erroneously as infringing. If Metallica can't accurately screen one band's music through a supposed network sleuth like NetPD, how can Napster screen out the literally millions of sound recordings the Recording Industry Association of America ("RIAA") claims its members own? What Napster can do, and has done, is block access for those who copyright holders accuse of infringing. If the user challenges the claim, let the two resolve the dispute as the DMCA requires.
  1. You mentioned the DMCA. The recording industry and Metallica say that U.S. District Court Judge Marilyn Hall Patel's May 5 ruling on the DMCA has cut the legs off of Napster's defense. Just how important was that decision?
  1. While Napster would have liked the decision to go the other way, Judge Patel's ruling on Section 512(a) of the DMCA just opened up the issues. It decided almost none of them. The plaintiffs still must prove that Napster does not have substantial non-infringing uses, and that Napster has the ability to control what files the various users choose to share. As I already explained, the plaintiffs have big problems on those issues.

    Napster's motion for summary adjudication under section 512(a) was designed to save everyone a lot of time and energy, because had the court ruled for Napster, there would have been no need to deal with any other issue in the case. Section 512(a), one of the four so-called "safe harbors" under the DMCA, applies to an ISP that provides "routing, transmissions or connections" through its system. Section 512(a) protects ISPs from court-issued injunctions regardless of their knowledge or ability to control their users, and without regard to the extent of non-infringing use.

    Judge Patel held that Napster did not qualify under Section 512(a) for fairly technical reasons -- because the transmissions of files do not pass "through" the Napster servers, but rather pass directly between Napster's users over the Internet. Judge Patel accepted the RIAA's argument that Section 512(a) should be limited to "conduits," like telephone companies, that provide the routes through which the data flows. On the other hand, Napster may still qualify for one of the three remaining three safe harbors under the DMCA. But those require inquiries into more complex factual areas, which we'll now be dealing with as the case moves ahead.
  1. If you're right, doesn't that leave the artists with the problem of getting paid for their work, since their music can be snatched up for free in MP3 format?
  1. It's interesting to see the recording industry suddenly worried about fairly paying artists. But no one has produced a speck of evidence that Napster has cost artists a dime. In fact, CD sales were up substantially for 1999 and the first quarter of 2000 -- even as Napster and other file-sharing technologies were proliferating. As I already mentioned, thousands of artists have asked Napster to share their works. As with all other free music marketing mechanisms -- radio, MTV and VH1 -- gaining exposure and word-of-mouth helps artists make money via other channels, such as concerts and CD sales.

    Plus, Napster has said it is ready and willing to work with the artists and the recording industry to develop a model that satisfies the interests of all concerned. The Napster file-sharing format is a far better platform for building a model compared to completely decentralized systems. In those other systems, there's no one central company or service available to monetize the exposure for artists or respond to their concerns. It's inevitable that file sharing over the Internet will grow and flourish, no matter how the Napster lawsuits are resolved. The only question is whether the format that prevails is one that has the potential to serve artists in some coherent fashion. We hope Napster can join with others to develop a solution that will both spread the enjoyment of music by all kinds of artists and drive compensation to the most deserving -- the artists themselves.

Laurence Pulgram is counsel to Napster, Inc. and is a partner at Fenwick & West LLP, a San Francisco, Palo Alto and Washington, D.C. firm specializing in high technology. He has engaged in the practice of business and intellectual property litigation for 16 years.

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