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[Note: Page numbers refer to an earlier, hard copy draft.]

In The Beginning... 1

I. Then and Now - A History of Copyright and File Sharing 3

II. File Sharing As "Fair Use" Under the Copyright Act 9

A. When Copying is Allowable Under the Act: "Fair Use" 13
B. The Four Prongs of "Fair Use": Overview 14

1. The First Prong: Purpose and Character of the Use 15
2. The Second Prong: Nature of the Use 18
3. The Third Prong: Amount and Substantiality of the Portion Used 20
4. The Fourth Prong: Effect of the Use Upon the Owner's Potential Market 23

Endnotes 29

In The Beginning...

"All rise.  Recording Industry Association of America versus tammany[NYC].  The honorable Judge Informed presiding."  And with this simple statement, the first lawsuit against an individual P2P music downloader will begin.

Reporters from all corners of the press and other media will be there.  Presidents from major recording labels will be there.  Members of the Electronic Frontier Foundation will be there.  Recording artists themselves will be there.  This will no doubt be a knock down, drag out, no holds barred fight.  The end result will be worth hundreds of millions of dollars.

tammany[NYC] is the "screen name"1 of someone alleged to have engaged in "Peer to Peer" (P2P)2 file sharing.  She is the defendant in this proceeding.  tammany[NYC] is being sued for copyright infringement because she is alleged to have allowed others also using the P2P network service to download copyrighted materials from her computer's hard drive.
Nothing extraordinary distinguishes tammany[NYC] from the millions of other computer and internet users using P2P software.  Using her P2P software, she downloads music from other P2P users.  The P2P software that she and other in the P2P community regularly use allows them to access from each other the songs they keep on their personal computers.  She is just one of millions of people both in the United States and throughout the rest of the world using this free P2P software to share music files.  The difference, and the only difference, is that she was singled out, targeted, and sued.

The Recording Industry Association of America (RIAA) is the trade group that represents major recording labels in the United States.3  As such, the RIAA is bringing this suit against tammany[NYC] on behalf of the major recording labels.  Like every individual P2P user before her, tammany[NYC] could have taken the settlement offer from the RIAA.  She could have paid the RIAA $10,000 and the RIAA would have dropped the suit.  But tammany[NYC] decided to do what no other individual P2P user before her had done.  She decided to fight the charges.

In the not so distant future, the situation described above will present itself.  When it does, an attorney will look to past copyright law cases in defending her client.  What this attorney will find is a rapidly growing body of case law involving P2P file sharing.  Unfortunately, much of the case law is based upon factual misunderstandings regarding copyright law and P2P files sharing.  Future attorneys will need to be armed with not only the appropriate legal theories, but also a thorough understanding of the technical facts to which the law will be applied.

How did tammany[NYC] get herself into this situation?

We begin her story with the United States Constitution.  The "Copyright Clause" in Article I, Section 8, provides that "Congress shall have the Power . . . 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." 4  "Limited times" originally meant 14 years, with an optional extension upon renewal for another 14 years. 5   An author or inventor would only choose the extension if the work was still garnering enough income to make it worth her while to apply for the 14 year extension.  Following the term of copyright protection the formerly copyrighted materials were placed in the public domain to be used by anyone who wanted to use them.

In other words, the end, or goal of copyright protection was to give an incentive to authors and inventors to continue creating by providing them a monopoly over their work for a limited time.  The original limit of 14 years struck a balance between the benefit received by society of having the work in the public domain to be freely studied and built upon, and the opportunity for the creator to receive financial gain from her work.

After several revisions at the entertainment industry's urgings, by 2004 "limited times" has been extended to the creator's lifetime plus 70 years for new works. 6   The United States Supreme Court has upheld this extension as constitutional over arguments that neither such a long term, nor Congress' repeated further extensions throughout the years meet the constitutional standard of limited. 7

This was a big win for the music recording industry. 8   Many recording companies have extensive numbers of copyrighted compositions that they no longer find profitable to publish.  As such, these companies do not make available these compositions for purchase.  Recording companies now have even more years to keep compositions from consumers who would like to obtain it but have no means of doing so.  It is not that consumers have literally no way of obtaining such music legally.   Consumers can sift through used CD bins in a hit and miss fashion at various second hand shops available to the consumer.  But the difficulties and costs are such so as to make the option of downloading the composition seem all that much more attractive.

The goal of copyright protection is to give authors an incentive to create.  This goal is achieved by encouraging people to create and publish their works by allowing them a limited amount of time to make some money from their creations.  As the "limited time" has been expanded by potentially as much as ten fold9, such incentives begin to fail.  Indeed, by now these "limited times" may actually create a disincentive to create.  A composer who wrote one "hit" song that remains popular over time might be able to live the rest of her life from the royalties. 10   Even her heirs would benefit for 70 years beyond her death.  This creates a disincentive to create, not only for the artist, but for her heirs as well.

Around 1996 a new audio format called "mp3" was unleashed unto the world. 11   The combined capacity of this software with that of late 20th century computers meant that many people, especially college students, were able to transpose their favorite songs from vinyl, tape, or CDs into files on their computer's hard drives that could then be played back at nearly the same quality.  One of the benefits of the mp3 format was the relative size of the files.  If a listener was willing to accept a relatively modest amount of sound degradation, an mp3 file of a song could be created and stored on a computer in roughly 10 percent of the space that would have been required by that same song in a CD-quality format.  When thousands of songs are stored in this manner, the difference in physical memory needed to store this music is significant. 12   It allowed a music lover to listen for hours on end without ever having to change a CD.

In 1998, the Digital Millennium Copyright Act (DMCA) was enacted.  The DMCA implements two 1996 World Intellectual Property Organization treaties.  It "also addresses a number of other significant copyright-related issues" 13, including the impact of new technology.  However, what the DMCA did not anticipate was the coming of Peer-To-Peer (P2P) file sharing.
P2P technology has extraordinarily humble roots.  It wasn't designed in an industrial laboratory.  Nor was it the end result of years of painstaking research.  What came to be called "Napster" was created by Shawn Fanning, a 19 year old college freshman, in 1999.  His intention was to create software that would allow him to more readily trade mp3 files with his friends.  Shortly thereafter, Napster went global.  By 2000 there were an estimated 60 million people regularly using the service.14
In that same year Napster was sued in the northern district of California and lost.15   Napster's Achilles heal was its architecture.  The architecture required computers operating as central servers.  These shared servers enabled two potential traders to know what mp3 music files the other had on his or her hard drive.  The Napster team had argued that the file sharing service had many uses beyond trading what the plaintiffs called "illegal song files."  Nevertheless, the court ruled "that any potential non-infringing use of the Napster service is minimal or connected to the infringing activity, or both."16   As a result, Napster's central server computers were turned off.  Because the configuration of the Napster system relied entirely upon those servers, when they were shut down the network collapsed, and those 60 million users regularly using the service were instantaneously cut off.

When the decision was announced, it appeared to be a huge win for the recording industry.  Individuals could no longer trade copyrighted music via Napster, which was without a doubt the most widely used file sharing software on the Internet.  However, what happened next shocked the industry.  Rather than having eliminated P2P file sharing, the disappearance of Napster was followed by a 535% increase in the titles of P2P software.17

Moreover, the new P2P software and networks no longer required central servers.  Each "peer" computer could connect directly to millions of other "peer" computers running the same software.  The P2P software finds other "peers" on the Internet and queries these other "peers" to see if any have the desired files.

As the new P2P systems proliferated, the recording industry once again chose to use the legal system to try to shut them down.  The RIAA began to use a provision of the Copyright Act contained in the DMCA to obtain the identities of anonymous music file traders.18   That provision, § 512(h), allows a copyright holder to obtain a subpoena demanding that an Internet Service Provider (ISP) obtain and then report the identity of an alleged copyright infringer.19   Early attempts to utilize this section of the Act worked well for the RIAA.  Many ISPs complied with the subpoenas, enabling the RIAA to bring suit against several alleged file sharers.  None of the suits resulted in trials because they were either settled or dropped for insubstantial or inaccurate evidence.  As of early 2004, no court has ever found a P2P user liable for copyright infringement.20
Some ISPs as well as some P2P software users began to question the validity of these subpoenas.  As one critic said, "an overly broad interpretation of the DMCA subpoena powers allows private parties unprecedented access to others' personal information. . . . Even the attorney general, in furtherance of a terrorist investigation, doesn't have this kind of authority."21   Given that these suits involve people engaged in trading entertainment media, and not the materials of terrorism, the RIAA's legal powers and strategies seem a bit extreme

Ultimately, these issues were addressed by a United States district court.22  In that case, the court reached two broad conclusions.  First, only an ISP storing infringing material on its servers can be subpoenaed under section 512(h)23.  Second, potential P2P infringement is not covered by sections of the Copyright Act meant to "disable" transmission of infringing material24 unless such material is expressly identified.

As of early 2004, the RIAA is still bringing suits against individual P2P users.  Eventually the RIAA probably will be successful with some form of subpoena, and will be able to identify P2P participants.  Eventually, tammany[NYC] will be found.  And eventually, tammany[NYC], with the aid of her lawyer, will endeavor to stand up for her rights.  But when that time comes, will they have a leg to stand on?

 Some courts have held that trading mp3 files constitutes copyright infringement25, and as such the distribution and acquisition of these files is "illegal."  Furthermore, the same courts have held that trading music files via the Internet does not fall under the safe harbor of "fair use."26

 An argument to oppose these courts' rejection of the "fair use" exception is that downloading mp3 files can be thought of as previewing material contained on a CD.  Many merchants allow customers to listen to music before they purchase the CD via in-store listening stations.  This practice is even more prevalent for on-line stores, which often allow the consumer to listen to or download at least a sample of the songs on the CD before they decide to purchase it.  By way of analogy, when one decides to purchase a book, magazine, etc., she is allowed to read through the book to get an idea of its content before purchasing it.  Before purchasing a piece of artwork, the consumer is allowed to at least see the piece to decide if she wishes to purchase it, is she not?

 Of course, the obvious difference between previewing art or literature and previewing music is that the consumer does not usually have a nearly flawless copy of the book or artwork to examine at her leisure.  When tammany[NYC] downloads a song using P2P software, she obtains a nearly flawless copy of that song.  However, when a consumer purchases a CD, she is purchasing more than just the songs.  As described more thoroughly below in Section II(B)(3), what the consumer is purchasing is the entire packaged album, not individual songs.  At the outset therefore, generally speaking, the act of previewing of individual songs before one purchases the CD should be considered "fair use" per se.

Generally speaking, when one decides to record a television program, the Supreme Court has held in Sony Corp. v. Universal City that such taping constitutes fair use under a concept the Court calls "time-shifting"27.  The Court's holding in that case was that this copyright exception is quite narrow.  The 9th Circuit has held that a similar idea called "space shifting"28 is also a "fair use" under the Copyright Act.29   "Space-shifting" allows a consumer to transfer copyrighted works from one format to another for non-commercial purposes.  By combining the concepts of "time-shifting" and "space-shifting", when tammany[NYC] records a song from internet radio ("time-shifting") and transfers that song into mp3 format for non-commercial use ("space-shifting"), she has not violated the Copyright Act.

However, when tammany[NYC] allows another to copy a song from her hard drive using P2P software, she has now distributed copyrighted material in violation of the Copyright Act.30   But is this violation worth singling her out and bringing her to court?  Is this violation worth $150,000 per song31?  Common sense cries out that tammany[NYC]'s permitting of others to download songs is de minimus when compared to the big picture.  The record companies involved in these suits are global companies.  Globally, the biggest money loser for these companies is the rampant pirating of CDs overseas, where the vast majority of CDs purchased are pirated copies sold for profit.  When comparing the millions being lost in foregone sales in those situations, the permissive act of tammany[NYC] allowing songs to be downloaded not for profit seems quite insignificant.

 Trading mp3 files constitutes copyright violation.  While this is true by definition, the use could fall into the categorical exception of "fair use".  The trend of the legislature and the courts has been to allow the Act to be constructed and construed to allow every thought ever fixed into a medium to be bought and sold as a commodity.  The marketable period for this fixed thought is the life of the scribe who put down the thought plus 70 years post partum.  Should anybody be in violation of this Code, she faces punishment of $150,000 per violation.  One critic of this trend has said "you'll get to the point where you say, 'Well, I guess that 25 cents isn't too much to pay for this sentence,' and then there's no hope and no going back."32   The current state of the Copyright Act as constructed and construed makes the Act the end in and of itself, and not the means to the end that the framers intended.  As the Act is allowed to expand beyond its original intent, the exemptions should also be allowed to grow.

 The fair use doctrine is now codified in the copyright code33.  When the copyrighted work is used for certain purposes that would otherwise violate the Copyright Act, and such use passes a four factor test, then such use is considered a "fair use" of the copyrighted work34.  When a court is given appropriate information upon which to apply the law, the potential suddenly exists that trading mp3 files should fall within the safe harbor of "fair use".
 The following material will be broken down as follows.  I will discuss the allowable uses under fair use in general.  I will then take each of the four fair use factors individually and discuss how each is incorporated into the topic of mp3 file trading.

A. When Copying is Allowable Under the Act: "Fair Use"

 The Copyright Act states that "Notwithstanding the provisions of sections 106 and 106A [relating to the creator's rights], the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright."35   Accordingly, section 107 trumps sections 106 and 106A due to the word "notwithstanding."

 Section 107 allows for "reproduction" under "fair use" "for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research."36   Trading mp3 files through P2P software for purposes of previewing the material before purchasing the material could reasonably fall under the purposes of criticism, comment, and research.  Even if trading mp3 files does not fall under any of these terms, the phrase "such as", properly understood, does not limit the purposes to those listed in the statute, but rather uses the purposes listed to create an overall feel of what purposes are allowed.

Why should tammany[NYC] be forbidden to listen to potential purchases before she buys them when such listening does little more than inform and educate her as to whether she indeed wants to purchase the album?  This should be considered "research", even though it is not "research" in any clinical or academic respect.  Once she has concluded her research, tammany[NYC] can then publish her "criticism" or "comment" on what she has heard.  As such, P2P file trading should be allowable as a means to preview the material by means of research, critique and comment, thus satisfying the first sentence of the "fair use" exception.

B. The Four Prongs of "Fair Use": Overview

 When analyzing a potential "fair use", the use must also be analyzed under the four prongs of § 107.37   The Supreme Court has held that the analysis of the four prongs is not to be simplified by bright-line rules because both the statute and the principle of fair use call for a case-by-case analysis.38   Each file sharer must be brought to court individually to have each case tried one at a time.  Any attempt to try more than one P2P user should be ruled as both a violation that user's due process rights as well as an improper use of using the Copyright Act.

 The Supreme Court has also said that these four prongs must be considered together, not separately.39   To prove that tammany[NYC]'s use is fair use, a court must balance all four prongs, although it need not balance them equally.  Therefore, a court cannot hold no "fair use" when the use fails one of the four prongs without explaining why that the other three prongs are dispositive.

1. The First Prong: Purpose and Character of the Use

 The profit/non-profit distinction does not turn on whether tammany[NYC] is motivated to use the material to make a profit, but rather it turns on whether she stands to make any profit from the use of the material "without paying the customary price."42   tammany[NYC] is neither motivated to share files to make a profit, nor does she stand to make any money from trading mp3 files using P2P software.  Therefore, tammany[NYC]'s activities are non-profit in nature, which presumes that such use is fair use.

 The "propriety", or reasonableness, of tammany[NYC]'s conduct is also relevant to the character of the use.43   Compared to the propriety of a pirate selling illegal copies of music for profit, the propriety of tammany[NYC]'s actions seem much more reasonable.  tammany[NYC] is making copyrighted material available for others to download without any opportunity to create a profit.  With P2P technology, other P2P users can both read tammany[NYC]'s critiques as well as formulate their own opinions by downloading the songs tammany[NYC] has made available.  The propriety of the tammany[NYC]'s actions, especially in light of those who are selling CDs of pirated material for commercial purposes, leaves the purpose and character of her use categorically under "fair use."

Users wanted to obtain music quickly, cheaply, and from the comfort of their own homes.  This niche market quickly exploded into a mass market, and when the copyright owners were unwilling to fill this niche, the consumers themselves did so.  What has thrown the recording industry into a tailspin is the relative speed and ease with which consumers did so.  P2P software was not a product of the music industry, as has been every other audio distribution system.  The consumers themselves created it.  Before the music industry had a chance to react, the P2P system was in place.  Without knowing how to react, the industry tried to destroy that system instead of embracing it for its profit potential.  That may have been a mistake.

In the Napster case, the court suggested that file traders reap economic advantage by obtaining something for free that they would ordinarily have to purchase.44   This observation is wrong for two reasons.

First, not every song downloaded would have been purchased.45   Second, very little of what file traders trade is available for purchase.  File traders often trade single songs for free in mp3 format.  The mp3 format is popular because it can be played across a variety of hardware platforms.46   What is available for purchase and download are proprietary audio formats that are not compatible across platforms.  File trading gives consumers the ability to acquire the mp3 format they want for free instead of the other formats they don't want for cost.

In the end, both the purpose and the character of P2P software use constitutes "fair use."  The underlying purpose of trading files is purely non-profit.  The character of traded files is reasonable given the conduct of those trading the files, especially in light of others who are profiting from the illegal sales of copied CDs.

2. The Second Prong: Nature of the Use

This holding of the Napster court may not be entirely accurate.  The holding cited the Harper & Row Supreme Court case as authority.51   In Harper & Row, the court said "The law generally recognizes a greater need to disseminate factual works than works of fiction or fantasy."52   The Napster court seemingly assumed that the Harper & Row court impliedly meant that works that are not factual "cut against" a finding of fair use.

Arguably, the court overextended the converse of the Harper & Row Court's statement by stating that just because songs are entertainment, they automatically "cut against" a finding of fair use.  The Harper & Row Court never announced how much less protection entertainment works were to receive.  A plausible reading of the converse of the Harper & Row statement would hold that non-factual entertainment works get "less protection" under copyright law, which is a much softer rhetoric than stating that entertainment works "cut against" a finding of fair use.  The Harper & Row Court may have meant "greater" to mean just enough greater so as to give non-entertainment work the benefit of the doubt as opposed to having entertainment works "cut against" finding of fair use.

The second dichotomy is the published / unpublished dichotomy.  The Supreme Court has considered the unpublished status of a work to be a critical factor in determining the work's nature.53   The Court has further stated that the fair use exception is narrower with an unpublished work.54   Pause must again be given due to the two most obvious reasons a work is unpublished.  A musical work may be unpublished because either its release date is in the near future, or because it is currently out of print.

If a musical work is unpublished because its release date has not yet arrived, then the Court's conclusion makes perfect sense.  Considering that the costs incurred with creating musical works, it is only fair that if copyrighted works are prepared but just not yet available, the scope of fair use should indeed be narrowed.  The industry should not need to implement security systems around an album release that rival those of nuclear missile silos.

However, if the only reason the musical work is unpublished is because the copyright holder no longer deems the production of the work profitable, then the scope of fair use should be broadened instead of narrowed.  File trading is inconsequential to the copyright holder in this situation because any means for the consumer to obtain the product will not provide revenue to the copyright holder.  Consumers are only filling a self-created niche in a non-profit manner, and should not be penalized for doing so.  In this situation, tammany[NYC] should not be penalized for providing these songs for others to download.

3. The Third Prong: Amount and Substantiality of the Portion Used

If the song being traded is the qualitatively substantial portion of the product, then consumers should be allowed to purchase the portion they want, in the format they want.  In Harper & Row57, the Court held that the portion of the book that was copied was indeed the heart of the book.58   Of course, publishers don't just put the heart of the book onto the market.  But the scenario of the book can be distinguishable from the scenario of the CD.  No mass market demand exists for the heart of a book.  But an enormous market exists for single songs in mp3 format.  An estimated 2.6 billion files are downloaded per month for free using P2P networks.59   Even using conservative numbers, the music industry stands to make a tidy profit from the sale of mp3 songs via the Internet.60

The Napster court held that downloading a song was an "undisputed" copying of the entire work.61   I pause to give consideration to the word "undisputed".  If "undisputed" means that the parties to the litigation conceded as much, then that was a misunderstanding by the parties.  If "undisputed" means that the point was litigated, but that the court found that the song constituted an entire work, then the court didn't have the correct information.

An anomaly appears in the Napster court's analysis.  The court held that the downloaded song constituted the "entirety" of the work.62   Yet at the beginning of the opinion, the court's own findings of fact stipulated that compression mechanisms resulted in "some" loss of sound quality.63   Perhaps the court meant that the work being downloaded constituted "substantially" the entire work.  But a plain reading of the opinion does say that.  A song cannot logically be downloaded in its "entirety" with "some" loss of sound quality.

The court was most likely misinformed about the mp3 format.  The amount of "some" loss of sound quality ultimately depends upon the listener's ears, as well as the equipment the file is created and subsequently played on.64   The quality of an mp3 file also depends upon the "bitrate" at which the file was encoded.65   Higher bitrates usually signal better quality.  However, this is not always the case.  The quality of an mp3 file depends entirely on the quality of the source from which the mp3 was created.  Once a song is compressed into an mp3 file at a certain bitrate, future conversions will never sound better than the mp3 file sounds at that original bitrate because that mp3 file is now the source from which future conversions are made.66

In at least one other case, the defendant has conceded that an mp3 file is not sonically different from the CD track.67   This point was not litigated, but conceded.  Future plaintiffs may rely upon this concession as a litigated court found fact.  But an mp3 file and a CD file are not sonically identical, and to any degree in which they are, the similarity depends upon the mp3 file's bitrate, the listener's ear, and any equipment used to create or play the mp3 file.  This fact was critical in the Napster court's analysis, because as they considered the mp3 file to be copying the "entirety" of the copyrighted work when in actuality an mp3 file cannot be the "entirety" of the copyrighted work because they are not sonically identical.
The amount and substantiality of the portion used in relation to the copyrighted work as a whole is far from "undisputed".  Until proper litigants on both sides can effectively argue this issue, it will factually remain.

4. The Fourth Prong: Effect of the Use Upon the Owner's Potential Market

 In Harper & Row, a magazine called "The Nation" obtained an unauthorized copy of former President Ford's then unpublished memoirs.70   Harper & Row had exclusive rights to the memoir, and had licensed to Time magazine the right to reproduce a portion of the book the week before its release.71   The Nation obtained an unauthorized copy of the memoirs and printed portions of the book verbatim without the approval of Harper & Row.72   Time subsequently cancelled its licensing agreement with Harper & Row.73   The Court held for Harper & Row because not only was there an effect upon the potential market, but there was an actual effect on the market due to Time pulling out of its licensing agreement.74

 No evidence has ever been presented to show any "actual" effect upon the market due to file sharing.  The music industry has provided only speculative information regarding the potential market for music sales.  As such, any comparisons to Harper by the music industry regarding the similarities between Harper and file sharing would be flawed unless the attorney brings in evidence showing actual effects upon the music sales market.  No such actual evidence exists.  Should such information come before a court, the court should probe intensely into the methodology behind the accumulation of such data.

To negate fair use, the music industry need only show that should a use become widespread, such use would affect the potential market for such copyrighted music.75   A fair amount of evidence exists that runs counter to such an argument.  P2P software exposes consumers to artists they would not normally have an opportunity to hear.76   Such exposure has the inevitable effect of increasing, not decreasing, the potential market for copyrighted works.

The potential effect on the market is so minimal so as to be nearly incomputable.  The music industry's argument is that they can't compete with free.  Organizations that expect payment for their products can never compete with an organization that is giving the same product away.  But the argument assumes too much; namely, that each and every track downloaded would have been purchased but for the P2P software that makes downloading an essentially free activity.77   Certainly not every track downloaded by file sharers would have ultimately been purchased.  Many downloaded tracks would be foregone if even a tiny price were to be attached to it.

 For example, Eminem's album "The Eminem Show" outsold all other albums during its first week of release, despite the fact that it had been widely available through P2P software in the weeks just before its release.78   As of February 28, 2004, "The Eminem Show" is 8 times multi-platinum.79   This example is strong evidence that if people are downloading music, they're also buying it.

When tammany[NYC] allows another to copy and download a song, how could the court determine the effect on the potential market due to tammany[NYC]?  Such a computation would be little more than arbitrary.  Should a court decide to rule against tammany[NYC] and force her to pay an amount equal to the potential market losses for allowing others to download the song, such a ruling would be extraordinarily inequitable.  She should not be forced to bear the burden for all P2P users.

Many conclusions based upon findings of fact from previous cases upon which the law has been applied were erroneous or not well defended by defendants.  For example, a court has held that P2P software raises barriers for the music industry's entry into the digital download market.80   No reason exists to allow an industry to lag behind technologically and then seek judicial relief to stifle such technological innovation by others.  The P2P networks emerged only because consumers filled a self-created niche.  A lot of money will be made with this technology.  The per unit cost to the industry of selling digital downloads is zero.  And nobody can compete with free.

The court also held that the music industry has invested substantial time, effort, and funds into their eventual entry into the digital downloading market.81   How much time, effort, and funds are necessary when 19-year-old college freshman Shawn Fanning, original author of Napster, can create the same technology in his spare time? 82   With some small, easy modifications, the Napster technology as it existed could have easily been transformed into a profitable service.  The Napster court noted that BMG had already made more than 20 tracks available over the past five years.83   In one quarter the amount of time, Mr. Fanning took his simple idea and turned it into a multi-million dollar business.

Finally, during testimony in the Napster case, a music industry's witness said use of P2P software is eroding music sales.84   He used sales figures showing how CD sales in stores around the biggest wired colleges in the U.S. were down in the late 1990s.85   However, these sales figures did not include CDs purchased over the Internet.86   It is only logical that if the college is among the most wired, that the students would be purchasing CDs heavily over the Internet.87   It is bad facts like these, when presented to the court to apply law, create bad law.

No evidence that supports the proposition that P2P file sharing is harming the CD sales industry is without strong counter-argument.  As such, little evidence can be found to support the proposition that P2P software use effects even the potential market for CD sales.

In The End

 In the end, tammany[NYC] will be found not to be in violation of the copyright code.  Upon this finding, the music industry will have few legal legs to stand on.  Eventually, they will get the idea and begin to sell digital downloads for much cheaper than $.99 per song.  This will require massive renegotiations with royalty companies, online vendors, etc.  This will also require some rethinking of how music is distributed and released.  Consumers may very well be willing to pay $.25 per song as opposed to the current standard price of $.99.  Consumers may even be willing to pay $5 to download the entire album, including the extra goodies such as printable liner notes and lyrics, the week before the physical album comes out.  The end result will be that the marginal per unit cost to the music company will be very near zero, resulting in near 100% profit after sunk costs are factored out.

So when the fat checks begin to roll in from consumers, the record companies will pat themselves on the back for a job well done.  And tammany[NYC], being the humble gracious victor she is, won't ever bother to let them know that she was the one who pushed them make all this money.

1.  When P2P software users sign in, they use a "screen name" which allows the user to remain anonymous.

2.  P2P is a computer network architecture that allows users to share computer files with one another.

3.  http://www.riaa.com/about/default.asp

4.  Copyright Clause; U.S. Const. art. I, § 8, cl. 8.

5.  http://creativecommons.org/projects/founderscopyright

6.  1998 Sonny Bono Copyright Term Extension Act.

7.  Eldred v. Ashcroft, 537 U.S. 186, (2003).

8.  The music recording industry makes its money from sales of CDs, records, etc., that contain the original composition of the song.  The "thing" that is copyrighted is the composition itself, not the performance of it.  The artists who create the original composition sell their copyright rights in the composition by contract to an organization in the recording industry, typically a record label.  The label then makes money from the subsequent reproduction and sale of the composition.  However, the label makes no money from any performance of the original composition per se.  For example, when a performer wishes to play her composition of which she has sold her copyright rights to a record label, she does not violate the copyright rights held by that label by performing that composition.

9.  From 14 to 140 years.

10.  See the movie "About a Boy".

11.  See http://david.weekly.org/mp3book/ch1.php3.  This article articulates that the format was created in 1989 and standardized in 1991.  It wasn't until 1996 that computers were fast enough to actually play the mp3 standard in realtime.  This was just the beginning.

12.  The significance would be mathematically computable by totaling the space used by the mp3 files and multiplying it by .9, or 90%.

13.  Digital Millennium Copyright Act, Introduction.

14.  http://www.witiger.com/ecommerce/music.htm

15.  A&M Records, Inc., v. Napster, Inc., 114 F.Supp2d 896 (N.D. Cal 2000).

16.  Id. at 912.
 
17.  John Tehranian, "All Rights Reserved?  Reassessing Copyright and Patent Enforcement in the Digital Age," 72 U. Cin. L. Rev. 45, FN46 (2003).

18.  Digital Millennium Copyright Act, Title II, page 9.

19.  17 U.S.C. §512(h).

20.  "In a few cases involving first-generation file-sharing networks. . .it has been assumed that downloading music is infringement, but the question has never been litigated.  I am asserting. . .that no court has ever held a peer-to-peer user civilly liable for doing so."  Christian Harlan Moen, "Recording-Industry Subpoenas Spark Online-Privacy Debate," 39-NOV Trial 12, 14; quoting Sacramento, California, attorney Daniel Ballard.

21.  Christian Harlan Moen, "Recording-Industry Subpoenas Spark Online-Privacy Debate," 39-NOV Trial 12, 14; quoting Sacramento, California, attorney Daniel Ballard.

22.  RIAA v. Verizon, 351 F.3d 1229 (D.C.Cir 2003).

23.  Id. at 1233.

24.  See Id. at 1236.  The court was addressing the argument that the ISP should be able to disable the infringing content after notice under 17 U.S.C. § 512(c)(3)(A).  However, as the ISP did not store the infringing material on its servers, and the RIAA did not identify which material was to be "disabled", the notice under § 512(c)(3)(A) was invalid.

25.  A & M Records, Inc. v. Napster, Inc., 114 F.Supp2d 896 (N.D. Cal 2000).

26.  Id.

27.  Sony Corp of America v. Universal City Studios, Inc., 464 U.S. 417 (1984).

28.  "Space-shifting" was described in RIAA v. Diamond Multimedia Systems, Inc., 180 F.3d 1072, 1079 (9th Cir 1999), as shifting a song from a user's hard drive to a portable mp3 device.  The court described this as consistent with the Copyright Act.

29.  See 17 U.S.C. 1008, which allows a person to create copies of songs for non-commercial, personal use.  This section is silent with regard to the source of the original song.

30.  See 17 U.S.C. § 106(3).  It is worthy to note at this point that under 17 U.S.C. § 504(c) (Remedies for infringement; Damages and profits; Statutory Damages) the Act makes no distinction between commercial and non-commercial activities.

31.  See 17 U.S.C. § 504(c)(2), which allows for the court to award up to $150,000 per infringement.  Each song tammany[NYC] is allowing to be downloaded is considered an individual infringement.]

32.  Miriam Nisbet, the legislative counsel for the American Library Association.  http://www.nytimes.com/2004/01/25/magazine/25COPYRIGHT.html?pagewanted=all

33.  17 U.S.C. § 107.

34.  Id.

35.  Id.

36.  17 U.S.C. § 107

37.  Id.

38.  "The task is not to be simplified with bright-line rules, for the statute, like the doctrine it recognizes, calls for case-by-case analysis."  Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577 (1994).

39.  "Nor may the four statutory factors be treated in isolation, one from another."  Id. at 578 (1994).

40.  "commercial use of copyrighted material is presumptively ... unfair" while the "contrary presumption is appropriate" in the case of "noncommercial, nonprofit activity."  Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 449 (1984).

41.  Id.

42.  "The crux of the profit/nonprofit distinction is not whether the sole motive of the use is monetary gain but whether the user stands to profit from exploitation of the copyrighted material without paying the customary price" Harper and Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 562 (1985).

43.  Also relevant to the "character" of the use is "the propriety of the defendant's conduct."  Id.

44.  "Moreover, the fact that Napster users get for free something they would ordinarily have to buy suggests that they reap economic advantages from Napster Use."  A&M Records, Inc., v. Napster, Inc., 114 F.Supp2d 896, 912 (N.D. Cal 2000).

45.  Geraldine Szott Moohr, "The Crime of Copyright Infringemnet: An Inquiry Based on Morality, Harm, and Criminal Theory," 83 B.U. L. Rev. 731 (2003).

46.  Today, most computers, DVD players, car stereos, CD walkmans, and mp3 walkmans can be used to play the mp3 format.  While it is not the most efficient compression scheme on the market, it has become the de facto standard.

47.  See Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 563-64 (1985).

48.  See Id.

49.  "copyrighted. . .sound recordings are creative in nature" A&M Records, Inc., v. Napster, Inc., 114 F.Supp2d 896, 913 (N.D. Cal 2000).

50.  "they constitute entertainment, which cuts against a finding of fair use under the second factor."  Id.; citing to Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 563 (1985).

51.  Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 563 (1985).

52.  Id.

53.  The fact that a work is unpublished is a critical element of its "nature"  See Id. at 564.

54.  Fair use is narrower with respect to unpublished works  See Id. at 563-64.

55.  The opinion talked of the district court expressing that the defendant "took what was essentially the heart of the book "; and thus found the "qualitative nature of the taking" as being a big portion.  Id. at 564-65.

56.  "Indeed, in the entertainment realm, the product is often the buzz that surrounds the intellectual property, not merely the work itself."  John Tehranian, "All Rights Reserved?  Reassessing Copyright and Patent Enforcement in the Digital Age," 72 U. Cin. L. Rev. 45, 51 (2003).

57.  Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539 (1985).

58.  Id. at 566.

59.  http://www.riaa.com/news/newsletter/sherman_testimony.asp

60.  By the "conservative" estimate of 2.6 billion per month, if the recording industry could get 1% of the downloads (26 million) to be purchased for even 10 cents apiece, that would garner $2,600,000 per month for the industry.  Over one year, the total is over $31 million.  With per/unit costs of near zero, that total is infinitely greater than their current income of $0.  And that's all achieved by using "conservative" numbers.

61.  "With regard to the third factor, it is undisputed that downloading or uploading MP3 music files involves copying the entirety of the copyrighted work."  A&M Records, Inc., v. Napster, Inc., 114 F.Supp2d 896, 913 (N.D. Cal 2000).

62.  "With regard to the third factor, it is undisputed that downloading or uploading MP3 music files involves copying the entirety of the copyrighted work."  Id.

63.  "Compressing data into mp3 results in some loss of sound quality"  Id. at 901.

64.  "It depends on your ears, your equipment, etc. Some think it's probably fair to say that 128 Kbps is a bit near to CD quality, whilst 160 Kbps compressed by a good encoder should sound pretty good to most people under most circumstances."  http://www.mp3-converter.biz/help/mp3-bitrate-cd-quality.html

65.  For a laymen's analysis of the different bitrates and their corresponding quality, see http://ariya.pandu.org/articles/reducing_mp3_bitrate.htm

66.  To those readers who understand "computer-ese", mp3 compression is a lossy, not a lossless, compression scheme.  An mp3 file is a new file and can never be expanded back to its original quality.  This is because in order to create an mp3 at any bitrate, the compression must remove some portion of the audio contained in the original in order to create the smaller, compressed file.  For example, if tammany[NYC] compresses a CD file into a 128 mpbs mp3 file, then expands that file back into a wav file, and finally recompresses the wav file at a 192 mpbs bitrate, the sound quality will still be that of the 128 mpbs file because the quality that was originally lost upon the first compression is gone forever.  In the end, the amount of the "some" quality that was lost will never, ever, under any circumstance, be regained, regardless of the methods employed.

67.  Defendant claims that the simulated sounds on MP3-based music files are not physically identical to the sounds on the original CD recordings. . . . Defendant concedes, however, that the human ear cannot detect a difference between the two.  UMG Recordings, Inc. v. MP3.com, Inc., 92 F.Supp.2d 349, 350 FN1 (S.D.N.Y. 2000).

68.  "This last factor is undoubtedly the single most important element of fair use."  Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 567 (1985).

69.  "Nor may the four statutory factors be treated in isolation, one from another."  Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 578 (1994).

70.  Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 543 (1985).

71.  Id. at 542.

72.  Id. at 543.

73.  Id. at 543.

74.  "The trial court found not merely a potential but an actual effect on the market."  Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 567 (1985).

75.  More important, to negate fair use one need only show that if the challenged use "should become widespread, it would adversely affect the potential market for the copyrighted work." Id. at 568 (emphasis in original); quoting Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 451 (1984).

76.  For almost daily articles regarding this issue, please see http://www.kurthanson.com for his daily RAIN (Radio And Internet News) newsletter.

77.  Geraldine Szott Moohr, "The Crime of Copyright Infringemnet: An Inquiry Based on Morality, Harm, and Criminal Theory," 83 B.U. L. Rev. 731 (2003).

78.  John Tehranian, "All Rights Reserved?  Reassessing Copyright and Patent Enforcement in the Digital Age," 72 U. Cin. L. Rev. 45, 73-74 (2003).

79.  http://www.riaa.com/gp/database/default.asp

80.  "[Napster] raises barriers to plaitiffs' entry into the market for the digital downloading of music."  A&M Records, Inc., v. Napster, Inc., 114 F.Supp2d 896, 913 (N.D. Cal 2000)

81.  "The record company plaintiffs have invested substantial time, effort, and funds in actual or planned entry into the digital downloading market." Id. at 908.

82.  http://www.businessweek.com/2000/00_20/b3681054.htm

83.  "From 1996 until 2000, BMG explored digital downloading and made more than 20 tracks commercially available for downloading." A&M Records, Inc., v. Napster, Inc., 114 F.Supp2d 896, 908 (N.D. Cal 2000).

84.  During the Napster case, Soundscan's CEO, Michael Fine, testified on behalf of the music industry. As he argued, P2P file sharing has eroded music sales.  John Tehranian, "All Rights Reserved?  Reassessing Copyright and Patent Enforcement in the Digital Age," 72 U. Cin. L. Rev. 45, 74 (2003).

85.  Id.

86.  Id.

87.  Id.