________________________________________________________________________________ Wired News Napster CEO Gets Intellectual by Brad King 3:00 a.m. Oct. 2, 2000 PDT Hank Barry sounds tired. Frankly, who can blame him? In May, Hummer Winblad pumped $15 million into Napster and installed Barry as the CEO of the company. His charge: Find a way to make the company legitimate. Easier said than done. The Recording Industry Association of America was already six months into litigation, which had effectively ended any real hope that Barry could wrangle a settlement. Other digital music companies were wary of doing business with Barry for fear of upsetting the RIAA and getting dragged into court alongside the company. Even Liquid Audio Liquid Audio (LQID), which was also funded by Hummer Winblad, has been relatively quiet since an announced research and development pact was made. To make matter worse, a district judge issued an injunction that would have effectively shut down the service, and very likely the company. Only a last minute stay granted by the U.S. Ninth Circuit Court of Appeals saved the company. As a team of lawyers -- led by David Boies -- head back into the Ninth Circuit courtroom hoping to stave off the recording industry's attempt to shut down Napster, Barry reflects on copyright laws, the recording industry, and the future of Napster. Wired News: Where do you see copyright and intellectual property as it pertains to the Web? Hank Barry: There are new technologies and new challenges that we all have to face, but if you look at copyright, it has adapted itself over the last couple three hundred years to a variety of technological changes. The invention of the photocopying machine was something that people thought would be the end of books as we know it. Certainly the VCR was a technology that came along that people were confused about for awhile. With respect to all of these things, it just takes awhile to sort them out. We need to not panic and look at the principles that got us here and look at the balance between the interests of the artists and the people who make copyrightable works versus the interest of the public having access to those works and do a new formulation that applies to this area. WN: Is there a misunderstanding, because Napster is a software application, how it can be similar to a manufactured device? HB: The key thing about Judge Patel is that she looked at the facts and the law and tried to apply them as best as she could. This is not something that is particularly easy. We're confident that over time as we have an opportunity to spend more time with her and tell her about our case that we will be able to –- all of us -– learn more about the technology and how it applies to copyright. WN: You said she applied the laws as best as she could. Does that mean the laws need to be changed or tweaked? HB: The Audio Home Recording Act is a unique animal in that it only applies to sound recordings and music compositions. It really passed around the issue of home taping and the sharing of cassette taping that was going on at that time. It says this kind of activity in both the digital and analog world is immunized, so those are the plain words of the statute. We think the statute is clearly in our favor and we hope the circuit court will find that as well. WN: So there needs to be no legislation in this area. You think the law is already there. HB: Absolutely. WN: One of the issues that you raised is in regards to the size of the music industry. They have control of these copyrights. If the major labels own the rights to those songs, why are you not facilitating infringement? HB: In order to facilitate infringement, you have to assume that the activity that is going on across the system is infringing activity. That's where we disagree. We've said consistently that the activity of the users on the system, whether under the AHRA or the Sony Betamax decision, does not constitute infringing activity. If there is no infringing activity going on across the system, we can't be liable for contributory infringement. WN: That means even if they are downloading Metallica, your contention is that action is protected by the Audio Home Recording Act. HB: And the Sony Betamax decision. The question is when you get a CD and you make an MP3 version of the CD on your hard drive -- by the way Napster has nothing to do with that. We don't make any of those software programs that do that type of thing -- what are the scope of the rights that you have with that? That is the main question. It comes down to the scope of the rights of the consumer with a piece a music. WN: That very much mirrors what MP3.com MP3.com, Inc. (MPPP) CEO Michael Robertson said during his suit with the recording industry, which says this is fair use. HB: Not really. Our case is very different from Michael Robertson's. WN: Yes, it is, but the fair use argument is the same. HB: They built a database. They made copies to create this database. No one has ever suggested that Napster has made copies. In fact, we don't. No one has ever accused Napster of being direct infringers. The question is, are the users guilty of infringement and if they are, are we contributing to that. The Digital Millennium Copyright Act says it's going to provide a safe harbor to Internet companies like Napster as long as they do certain things to insulate themselves from liability. These certain things, we say, we've been doing all along. WN: You all didn't have a take-down policy very early on though. HB: We had one, it just wasn't posted on the website. WN: There is no business model for Napster, but you have 28 million users. How do you leverage that because that is your chip when you sit down with the recording industry or anybody? HB: I think when you say leverage it’s a weird word because it implies we are going to make money on those people. The activity that goes on across Napster, where people are sharing files one- to-one, one file at a time, is an activity that people don't get any money or expect any money. I don't think that is going to change. The question is if we are providing a convenient service, are the members of the community going to be willing to pay some kind of a fee to make the thing work. I think the answer is yes. WN: Like a subscription? HB: It's more like a membership fee, or a club fee, because remember, Napster is just a list of files and where they are and that changes every five seconds. So it's hard to say we're providing a great service. All we are doing is facilitating this communication that is going on. Will it turn into some super- profitable business? You can run a lot of different spreadsheets and get a lot of different results. WN: And this is very early on. You seem to be throwing stuff up against the wall and seeing what sticks to find out what people will pay for. HB: We’re trying to be a little more systematic that just throwing stuff up against a wall, but yeah, that's the point. We're doing a lot of research and talking to users a lot, trying to figure out what makes sense from their point of view. Remember, it's a community that all the resources associated with Napster are out on the computers of the people who use the system. In fact, it's 100 percent voluntary. WN: The sense is that you guys are mincing words. We've heard the emails from Shawn Fanning and Sean Parker, who are kids, who write things like "We are going to destroy the music industry." HB: What's funny is in the 70,000 emails we produced in the course of discovery, they found maybe one or one-and-a-half from Sean Parker, who is no longer with the company and who at the time was not with the company yet. The point we made in our brief is that he didn't have any basis for making those statements. It was great for the plaintiffs because they can take those seven words, blow them up three feet high, and put them on large panels for everyone to look at. That is great theater. That shouldn't be what governs in the circuit court whether we are liable for contributory infringement. WN: In her ruling, Judge Patel said that you all know that people are doing just that and that you should be doing something about it. You contention is that you can't police the entire Napster network, correct? HB: Our responsibilities are very clearly outlined in the DMCA. It's not a very controversial piece of legislation. Its says if you are an Internet Service Provider and there is a contention that there is infringing activity going on your system, the way to deal with that is the content owner is supposed to give you notice that this person over here is posting or is making available infringing material and you are then supposed to block access to that. If you do that, your job, you are going to be insulated from liability. WN: But didn't Judge Patel rule that you weren't an ISP? HB: Well, we think she was wrong about that. There is no practical difference between someone who has an application that resides on people's desktops like AOL and Napster. These are entities that facilitate communication over the Internet. The statute was clearly meant to apply to people like us. What the five major labels have done is refuse to comply with the DMCA. They have refused to give us the notice as to the people that they believe are infringing. They say it would be unduly burdensome, that it would difficult for them. But that's not what the statute says. What the labels want to do here is avoid the burden that was clearly put on them by the statute. That's the allocation of burdens that Congress made in the DMCA and that's perfectly appropriate and consistent with 200 years of copyright law. WN: What is the biggest problem with the media that you have had? HB: A lot of people write about Napster who haven't used Napster. My experience has been that the longer you are on the system, and the more you are familiar with it, the more you understand what the place of Napster is in the celestial stars of music. Napster, for most people, is primarily a promotional vehicle. Most people aren't using Napster to build large libraries of files. http://www.wired.com/news/culture/0,1284,39107,00.html ________________________________________________________________________________ no copyright 2000 rolux.org - no commercial use without permission. is a moderated mailing list for the advancement of minor criticism. post to the list: mailto:inbox@rolux.org. more information: mailto:minordomo@rolux.org, no subject line, message body: info rolux. further questions: mailto:rolux-owner@rolux.org. home: http://rolux.org/lists - archive: http://rolux.org/archive