Eric Blair
Computer Ethics
12/6/00
Digital Music and Consumer Rights
Over the past few years, nearly every type of commercial industry has needed to
deal with the rise of the Internet. The book sales industry was caught unaware by
emergence of Amazon.com. Catalog sales companies have expanded by selling over the
Internet. The web has made it easier for independent filmmakers to have their movies
seen. These are just a few of the examples.
The music industry has not been immune to the effects of the Internet. At first, there
were web sites like CDNow.com and MusicBoulevard.com that tried to do to the music
sales industry what Amazon.com did to the book sales industry. From the standpoint of the
record companies, this was not a bad thing — adding new sales outlets would not hurt the
bottom line. What came later, though, was a different story.
The music industry was caught off guard by the emergence of the MP3 format, as
well as services like My.MP3.com and Napster. The MP3 format allowed people to
distribute near CD quality copies of songs at a fraction of the size older file formats would
require. Services like My.MP3.com and Napster made it easier for the average person to
get their hands on MP3s. According to the record companies, these services facilitated the
illegal distribution of their property — the music.
This paper will begin with a description and analysis of the aforementioned music
services, followed by a explanation of pending legislation that could radically alter the world
of online music as we know it. Finally, the paper will conclude with an analysis of this new
legal option, along with another possible option for the record companies.
Both My.MP3.com and Napster were designed to let member access music, often
copyrighted, from the Internet. With My.MP3.com, MP3.com purchased a large number of
CDs, converted the songs to MP3s, and allowed users to play them over the Internet once
the user proved that they owned a copy of the CD. In contrast, Napster allows users to
search and download MP3s stored on the computers of other users. Napster does not
require users to prove that they own the songs that they are downloading.
Both services said that they were within their legal rights because they were only
allowing users to make a digital copy of their music. Napster extended that argument by
saying that their service facilitated the non-commercial distribution of music and that, under
the Audio Home Recording Act, “…which immunizes all noncommercial consumer copying
of music in digital or analog form.”1
Both MP3.com and Napster were have been taken to court by the RIAA. MP3.com
made deals with the major record labels that make up the RIAA. In general, MP3.com
agreed to pay for the right to use the labels music. The Napster case is still ongoing. At the
start of the case, the judge issued an injunction shutting down Napster’s file-sharing service,
stating that the service did not get AHRA protection because computers were not recording
devices. The injunction was stayed on appeal, mostly because such an injunction would
have forced Napster to go out of business.
In the narrow view of the record labels, services like My.MP3.com and Napster are
the same thing: potential loses of income. In this regard, they are right. Napster allows users
to download music for which they have not paid. My.MP3.com allows users online access
to music they own without paying for that right.
With Napster, the case is fairly clear-cut: downloading music you have not paid for is
no different than walking into a music store and slipping a CD into your jacket. Granted,
when you purchase a CD, you are often buying more than just the song you like on the
radio. However, that does not give you the right to say “since I cannot buy just what I want, I
will take it.” You need to balance to cost of purchasing an entire CD versus the benefit of
the additional music on the CD. In my personal experience, it tends to be a tossup:
sometimes I enjoy the additional songs and sometimes I can’t stand to listen to them.
I started collecting MP3s several years before the rise of Napster. Back then, I said
something like “I’ll limit the number of songs that I download — if I have a lot of songs from a
single group or album, then I’ll buy the CD.” At first, I stuck to my word, but lately my MP3
collection has been growing much faster than my CD collection. Today, I hear the same
justifications being made about Napster. People say that they are only previewing music
before buying the album. I’m sure there are some people who believe what they are
saying, and I’m sure that some smaller number actually practice what they preach. As time
goes on, I’m willing to bet that more and more people find their MP3 collections growing
faster than their CD collections.
My.MP3.com is a slightly different story. My.MP3.com allows user to play MP3s
over the Internet after they have proven that they own the CD containing the song. The
record industry’s complaint is not that this service exists, but the MP3.com provides the
service without paying the RIAA. The position of the RIAA seems to be that users can
only have MP3s of their songs if users either make the MP3s themselves, purchase them,
or download them from approved sources, like the record companies’ web sites.
MP3.com is not the only company that offers this type of service. There is also
Myplay, which gives you a 3 GB music locker where you can store MP3s. The difference
between Myplay and My.MP3.com is that Myplay requires that you convert your songs to
MP3 format and then upload them. Of course, since you are uploading MP3 files to their
server, there is no check that you are using MP3s that you own versus MP3 that you
copied off of Napster. Also, Myplay allows you to listen to music collections stored in the
lockers of other user — including music that you do not own.
On the surface, it seems that My.MP3.com does a better job of protecting the
interests of the record company, since it ensures that users are listening to music they
already own. However, the record companies apparently do not see it this way. At this
time, they have not filed suit against Myplay. Of course, this could have something to do
with the fact that Myplay sells information about its users to record companies: Myplay’s
business model is “…knowing what listeners like and marketing that data to music
companies. Myplay has a partnership with AOL and is currently closing a second funding
round.”2Since Myplay is willing to sell the information it gathers about its users, the record
companies have held off on trying to shut down the service.
The recent court rulings indicate that, under current law, services like My.MP3.com
and Napster violate the privileges of the copyright holders, namely the record companies,
when they distribute MP3s. Therefore, the only remedy under the law is to change the law.
As of last September, several members of the House of Representatives were trying to
do just that. Representative Rick Boucher, a Virginian democrat, sponsored the Music
Owners’ Listening Rights Act of 2000. Co-sponsored by 9 other Representatives, the bill
sought to make it legal for a service like My.MP3.com to provide music to anybody who
proves that they own a copy of that music. From the proposal: “the transmission of a
personal interactive performance of a sound recording… is not an infringement of
copyright.”3and “…provided that the transmission is received by a recipient who has
provided to transmitting organization proof that the recipient lawfully possesses… such
In addressing the House or Representatives, Boucher clearly stated the intention of
the bill: “Simply stated, a consumer who lawfully owns a work of music, such as a CD, will
be able to store it on the Internet and then downstream it for personal use at a time and
place of his choosing.”5Boucher also gave a perfectly valid reason why his bill would not
cause harm to the record companies — “Since the only people who will be able to use the
provision we are proposing have already the music, the song writers, recording artist and
record labels will lose not a penny in sales.”6
Ramifications and Analysis
At its base level, this dispute between MP3.com, Napster, and the record
companies comes down to money. Whenever somebody tries to make inroads into the
label’s distribution monopoly, their first reaction is to find some way to to benefit from the
situation. With Myplay, the record labels benefit because they get information about users
and the music they’re listening to. With Napster and My.MP3.com, the record companies
were not initially able to find such a benefit, so lawsuits were filed.
Back when the initial Napster lawsuit was filed, it looked like there was no way for
Napster to survive. The legitimate uses of the service are far outweighed by the illegal
exchange of copyrighted music over the system. Although the record companies claim
Napster must be stopped, that did not stop one of the record labels from pulling out of the
lawsuit and partnering with Napster. On October 31, 2000, Bertelsmann, the parent
company of BMG Entertainment, signed an agreement with Napster. Under the
agreement, Bertelsmann has the option of purchasing a minority partnership in Napster and
helping Napster set up a fee-based subscription service.7Basically, as soon as
Bertelsmann say a chance to make a profit off of Napster, Napster went from being
Bertelsmann’s worst enemy to being their best friend.
The My.MP3.com lawsuit was similar to the Napster lawsuit in that their was a
settlement. In fact, their were 6 settlements, as all the major record companies decided to
make their own deals with MP3.com. Now, the labels will make money once My.MP3.com
resumes it program CD-MP3 program.
The difference between Napster and My.MP3.com is that My.MP3.com was not
costing the labels any money. To paraphrase Representative Boucher, people using the
service already own the CD, so the record companies have already received money from
Some sort of legal protection is required to keep the RIAA from suing anybody and
everybody who doesn’t play by their rules. At the same time, it would be hypocritical to
demand legislation that robs the record labels of their right to run their business. For instance,
we should not suddenly say that Napster is acceptable because we don’t like the old way
of doing things. The Music Owners’ Listening Rights Act of 2000 balances the rights of the
labels with the rights that the people should have.
The record labels could help themselves by embracing the Internet. Make songs
available to for free download from your web sites. Maybe by releasing songs that are not
on the radio, the record companies can convince people that it is worth their money to buy
the album and see what else this band or singer has available. This could cut into the
samplers who use Napster to try before they buy. As I said earlier, it is my contention that
these users will eventually become heavy Napster users. By cutting into this market, the
record labels could cut the legs out from under Napster and any others who try to follow in
Personally, I do not think that simply passing legislation will be enough to keep the
record labels at bay. They have well-paid legal departments that are being paid whether or
not they are actually spending time in court. Whatever legislation that comes out of
Congress needs to be airtight or the record companies will continue to hammer away at it
with lawsuits until they find a crack.