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| STOP THE MUSIC | |
 July 27, 2000  |
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A court has ordered Napster to shut down. After a background report, Napster's counsel and an attorney for the recording industry discuss the legal controversy surrounding the music sharing web site.
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SPENCER MICHELS: Some artists like the heavy metal band Metallica agree. They want the royalties from their recordings. But other less well-known groups — like Hieroglyphics — have embraced the Internet, and want their music in cyberspace. Tajai Massey is organizer of the group.
SPENCER MICHELS: Even if Napster shuts down, many computer users and music fans say they will have no problem finding other programs to get free music. There's Audio Galaxy, Scour.Net. Cutemx, and one called Gnutella. It's not a company, but a technology that exists on the Net, with no way to shut it all down. Gene Kan and Spencer Kimball work on Gnutella.
SPENCER KIMBALL, Gnutella: It really is the wave of the future. You know, you want a song, it just instantly happens. You don't go to the store any more; you don't have to shell out as much money where you buy a whole album that has tracks you don't like in it. GENE KAN: Everybody is going to be using MP3s. CDs are on their way out.
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| Explaining the judge's decision | |||||||||||||||||||||||||||||
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JIM LEHRER: Ray Suarez takes it from there. RAY SUAREZ: Joining me now to discuss the Napster decision: Cary Sherman, general counsel for the Recording Industry Association of America, and Jonathan Schiller, partner with Boies, Schiller and Flexner, a Washington law firm representing Napster. Well, Jonathan Schiller, you've got until what - midnight tomorrow night. What is Napster doing between now and then?
RAY SUAREZ: Cary Sherman, first off, can your members help Jonathan Schiller understand what it is what you want him to block and also maybe you can talk a little bit about the arguments that your side brought forward that you believe carried the day in court.
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| Embracing new technologies | |||||||||||||||||||||||||||||
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CARY SHERMAN: As for the Audio Home Recording Act, I mean the court rejected that argument as specious and belied by the language of the statute itself. She specifically addressed the Sony Betamax case - said it had no application. I mean, this court rendered a very, very careful and reasoned decision. She went through every argument that was made by both sides and all of Napster's arguments were rejected completely. We're very confident that this decision will be upheld on appeal. RAY SUAREZ: Well, let me ask you a little bit more about the Audio Home Recording Act because there have been several cases where new technologies have come along that have used, as the sort of software they distribute, creative output. There was a problem in the early days of radio with using recorded music, and both of you have mentioned the case that the motion picture industry brought against Sony because you could now tape movies and television programs. In the end, both those industries ended up embracing those new technologies. Will your industry eventually end up finding a way to live with computer p-to-p - person-to-person sharing of recorded material?
RAY SUAREZ: Let me let Jonathan Schiller respond. |
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| The boundaries of fair use | |||||||||||||||||||||||||||||
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RAY SUAREZ: You used the phrase fair use a couple of times, Jonathan Schiller and so has Cary Sherman. Is there a difference in law between me going home with a CD, and then making a copy so I can play that in my cassette player somewhere in the house or going home with a rented movie and making copies of it for all my friends or for everyone in the neighborhood - are there different levels of use? JONATHAN SCHILLER: That's a fair question. The court struggled with that yesterday. The answer quite clearly in the law Congress passed is no. There's no limitation on who you share it with, one on one, whether it's with seven people in your neighborhood or seventy people in your neighborhood, and there's no limitation on how many people a Napster user shares it with. Now the judge assumed. . .
CARY SHERMAN: It just defies logic to think that a fair use doctrine which is what... It's supposed to be what's fair. A court is supposed to look at the facts of the situation and decide what is fair use under the circumstances. Is this going to have an adverse impact on the market for the works? Are they copying the whole work? Are they doing it for commercial purposes? Under every one of those tests, Napster loses. You don't have to be a copyright lawyer to figure out that it is not fair for somebody just because he buys a CD to be able to take the music on that CD and make it available to millions of anonymous strangers all over the world and to think that they rely on the Sony Betamax case which involved personal copying of a broadcast on to a tape so you can watch it later because that's a fair use, the notion that you could take a CD and publish it worldwide? It defies logic to consider that a fair use. RAY SUAREZ: Go ahead. JONATHAN SCHILLER: There's one terribly important fact that is disputed, and that is whether Napster and other Internet companies that facilitate sharing are increasing sales of Cary's clients. In fact, we say they are. We put in a study in evidence to show that. Today in the New York Times there was a discussion of the Jupiter Communications Study which says 45% of Internet users who sample music as Napster users do, they sample it and then they go out and buy it are inclined to buy music. That's an enormous percentage. Judge Patel paid no attention to that and refused to conduct the kind of hearing that would permit her to look at that evidence and consider it. Instead, she relied on a discredited study of college students that the Jupiter Communications report said is not reliable. So there are a lot of facts to be thought through and resolved. We ask that they be resolved in a trial which can be held promptly and protect Napster and its users at the same time. RAY SUAREZ: Cary Sherman, go ahead.
RAY SUAREZ: If Napster is going to stay on you'll have to hear from the circuit court tomorrow. JONATHAN SCHILLER: Yes, we are. We're hopeful that they'll review our papers, perhaps give us a telephonic hearing and issue a stay to permit them to look in detail at what we say, what Cary's clients say and what the court held. RAY SUAREZ: Jonathan Schiller, Cary Sherman, thank you both very much. JONATHAN SCHILLER: Thank you, Ray. CARY SHERMAN: Thank you. |
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SPENCER
MICHELS: In college dorms and homes around the country, music fans have
been using their computers to download music for free from the Internet.
The songs are converted from CDs into computer files called MP3s, which
can be sent over the Internet, and then played, either on a computer
or on a portable player similar to a Walkman. The most celebrated program
- with 20 million users - is called Napster, and it allows one computer
user to pluck music files from another computer, with no loss in quality.
GREG
KUNIT, Student: What Napster did was made things so easy that, literally,
all we'd have to do is just type in the name of a song, and up would
come a list of where we could download it from. Just double click, and
it would start downloading. It was that simple. 
SPENCER
MICHELS: But yesterday a federal judge issued a temporary restraining
order, directing Napster not to facilitate or permit infringement of
copyrighted material. That will halt the trading by music fans on the
Napster web site, effective at midnight tomorrow. The company —
which has been at the center of a major controversy — intends to
appeal the order, and is asking for a stay of the injunction. A full
trial is scheduled for later this year. The judge sided with the recording
industry, which claims that swapping music files was in direct violation
of copyright laws it has fought to strengthen. Hillary Rosen is president
of the Recording Industry Association of America. 
HILLARY
ROSEN: This isn't, you know, just a sweet young guy who's looking for
some fun in his college dorm room. They are building a business by facilitating
the stealing of artists' music. (Metallica music) 
TAJAI
MASSEY: To me, it just basically is access, and access to markets that
we'd never be able to touch. I mean, now we have offers to do shows
in South Africa.
GENE
KAN, Gnutella: The fact that this technology is out there means that
they either adapt, or they die. 
SPENCER
MICHELS: As the debate over Napster moves into court, many of those
on both sides are calling for a technological solution, some way for
artists and recording companies to collect a fee on downloaded music.
So far, record stores report only minimal sales losses, and only in
areas near college campuses. As the court was making its ruling, attorneys
reported that Napster's web site was flooded with music fans downloading
14,000 songs a minute. 
JONATHAN
SCHILLER, Napster Lawyer: Well, we asked the court of appeals for the
Ninth Circuit today at noon to use its emergency powers to stay the
injunction and give the court of appeals a chance to look at what Judge
Patel ruled. Judge Patel had a fundamental misunderstanding of the Napster
technology, and there is absolutely no way that Napster can comply with
her order without shutting down, blocking all access to the directory
that its users now have. That would deny more than 20 million Americans
the use of this service, and we are unable to comply with the order
because the plaintiffs have refused to identify the copyrighted songs
they wish us to block. When they've given us notice in the past of songs,
as they did with respect to Metallica, Napster acted and blocked those
users. But in order to know what songs are on the Napster directory,
one has to get notice and then go and search. The court misunderstood
the technology in the sense of believing that Napster itself put songs
on the directory. That's not how the technology works. The users of
Napster have their MP3 files identified on the directory. And they come
on as MP3 files. It would be up to someone to search those files to
see what the songs are in order to determine whether they are copyrighted
or not or whether they are copyrighted but authorized. For that reason,
we asked the judge to narrow her injunction to songs that have been
identified to us. She declined to do that. We've asked the plaintiffs
to identify the songs and they've refused to do that. That has put us
in an impossible position and one that we believe is contrary to the
audio Home Recording Act passed by Congress which permits non-commercial
sharing, and the Supreme Court's decision in the landmark Sony case
which permits non-commercial home use. It's peer-to-peer, Napster users
in their homes sharing these songs, which is what is going on. I think
the judge fundamentally misunderstood that and believed Napster was
identifying and selecting songs knowing full well they were copyrighted
and not authorized. That's simply not the case and on a preliminary
basis without an evidentiary hearing it was impossible to establish
that to the court's satisfaction.
CARY
SHERMAN, Recording Industry Association of America: Well, first of all
I think Judge Patel understood precisely how Napster works. In fact
she went up on Napster and used it, so she was quite well aware of how
it functions and she was also quite well aware that purpose of Napster
was to facilitate the exchange of pirated files. Internal documents
from Napster made clear from the beginning that they knew what they
were doing, that they were going to be arranging for users to exchange
pirated files and therefore they had to give them anonymity, so they
could do it with impunity. She basically concluded that you created
this monster. You fix it. They've known now -- we filed this lawsuit
in December. They've known for a long time that the reckoning day was
coming. They could have done something to find out what songs to be
taking down. There are many, many guides, which indicate the particular
copyrighted songs that are owned by the plaintiffs. They've chosen to
ignore the problem and hope it would go away. What's really interesting
here is that the judge basically found that they are engaging in massive
contributory copyright infringement for all copyrighted songs that haven't
been authorized. But the order applies to the particular songs that
are owned by the plaintiffs. What they're saying now is we only want
to take down the particular songs owned by the plaintiffs and we'll
continue infringing the copyrights on everybody else's until they sue
us. It's a very strange argument to be making to the court of appeals.
RAY
SUAREZ: Now, in the past - I'm sorry, go ahead. 
CARY
SHERMAN: Our companies are embracing Internet technologies very strongly.
They are engaging in all sorts of investments, technology partnerships,
putting their music on line with all sorts of new and innovative business
models. They're offering downloads for pay. They're offering subscription
services. They're offering downloads to kiosks. They're offering compilation
custom-made CDs, they're offering special kinds of web casting and interactive
web casting. The number of business models that are developing this
marketplace are extraordinary. It's quite different to simply allow
another business who doesn't own any of the copyrights, who never asked
for a license for any of the copyrights to build a multi-billion dollar
business on the backs of copyrighted works it doesn't own. It's just
not fair. And the court found that. When this case started, there were
a couple of hundred thousand Napster users. That was last December.
There are now 20 million because they're able to get this music for
free - the most popular sought-after sound recordings in the world available
for free. The court found that it was just unconscionable to allow that
to continue any longer. 
JONATHAN
SCHILLER: Yes, thank you, Ray. The case that you referred to in the
Ninth Circuit, which is where we filed our petition today, held and
said quite clearly that the recording act that Congress passed protects
all non-commercial copying by consumers of analog and digital music.
That's exactly what Napster users do. They copy that music from one
another's hard drives. Therefore under that Act and also under the Sony
decision, which permits such fair use, non-commercial use by consumers,
there is no infringement of those copyrights. Cary is making an assumption
that is contrary to the Ninth Circuit law, which we're now asking the
Ninth Circuit to consider in the context of Judge Patel's unprecedented
ruling. She did rule against us on a number of issues but those were
decisions of first impression. They are contrary to decisions in her
court by other judges and we say by the Ninth Circuit. In terms of what
Cary's organization is preparing, they are preparing a commercial alternative
to Napster. They're behind. And they want to eliminate what Napster's
created so that they can take advantage of what Napster has established
is a viable market for this kind of Internet sharing. It is not copyright
infringement as we hope the court of appeals will agree. And if our
users those 20 million Americans who are sharing home to home the records
that they have on their computers through MP3 files, then we can't be
contributing to infringement and we're not. 
RAY
SUAREZ: Let me go to Cary Sherman at that point. I imagine he doesn't
agree. 
CARY
SHERMAN: Thank you. The problem with waiting for a trial is that by
year end Napster claims that it will have not just 20 million users
but 75 million users downloading billions of songs; waiting just increases
the harm. That's why the judge decided that it would be unconscionable
not to act at this point. The court really did consider all the issues
that Jonathan just referred to about promotion and so on and so forth.
But she concluded that, number one, the study was unreliable but even
if it did have some promotional value, that was for the copyright owner
to decide. It's the creators who get to decide how to promote their
works, not Napster to come to us and say you don't know what's good
for you, we do; we're going to promote your works and we're going to
make billions of dollars in the process. That isn't what the copyright
law is all about. That's what the judge found.