Issue/News: Grokster, the RIAA and the battle over p2p

The tumultuous battle over p2p is being fought once again, this time the contenders are Fred von Lohmann of the Electronic Frontier Foundation and Adam Thierer formerly of the Cato Institute.

The issue: well, everyone pretty much agrees that RIAA lawsuits against file sharers aren't working too well. And the Grokster settlement threatens to chill innovation on the web by holding p2p providers accountable, a move that may also be ineffectual in driving down illegal file sharing. The EFF has just put out a paper to this effect, arguing that past attempts of regulating by RIAA lawsuit have failed miserably, resulting in a) disproportionate punishment b) the potential for innocents to be targeted and punished and c) no reduction of the impact that illegal file sharing has on the legal music market. Although the paper includes moral, pragmatic, and empirical concerns, the subsequent debate has boiled down mostly to the pragmatic- there is a market that has embraced p2p software for illegal filing sharing, and there is no workable alternative to the RIAA lawsuits currently in place- what can be done?

The main issue centers around EFF's proposed solution to the problem. From RIAA v. The People: Two Years Later:

"There is a better way. EFF has been advocating a voluntary collective licensing regime as a mechanism that would fairly compensate artists and rightsholders for P2P file sharing. The concept is simply: the music industry forms a collecting society, which then offers file-sharing music fans the opportunity to 'get legit' in exchange for a reasonable regular payment, say 5$ a month. So long as they pay, the fans are free to keep doing what they are going to do anyway--share the music they love using whatever software they like on whatever computer platform they prefer--without fear of lawsuits. The money collected gets divided among rights-holders based on the popularity of their music... the more competition in P2P software, the more rapid the innovation and improvement."

As the paper goes on the say, such a framework is already being pushed with the deal struck between Playlouder Music and Sony MGM (wait, the DRM villains?) to provide Sony's entire catalogue in a format that would allow it to be traded over existing p2p software- Grokster, Donkey, BitTorrent- and be tracked and protected from "leakage", creating a "walled garden" in which songs are tracked and kept from being illegally traded. Similar projects are following suit, such as SNOWCAP. How plausible is the idea?

That's what's being debated between von Lohmann and Theirer. Both agree that some sort of enforcement is necessary, but differ on the extent of that enforcement. Theirer quotes the EFF's white paper on "Play to Play", where von Lohmann writes:

"Copyright holders (and perhaps the collecting society itself) would continue to be entitled to enforce their rights against "free-loaders." Instead of threatening them with ruinous damages, however, the collecting society can offer stragglers the opportunity to pay a fine and get legal."

And this is where it gets tricky... and where I (and Thierer) think von Lohmann's logic starts to lack in a couple of key places. The "Two Years Later" paper makes a pretty strong case that P2P software is easy to produce, and quickly accessible. He also argues that consumers that do break the law should be fined a reasonable amount. This is predicated on the notion, reinforced by a fair bit of evidence, that in the end, most users WANT to go legal.

Regardless, we're left with the question of what consists of effective and reasonable enforcement measures for those that haven't signed on board:

1. Users that still don't go legal: There will be, of course, a group out there that refuses to pay the 5 or 10 or 20 dollar fee that comes with a pay-to-play plan. von Lohmann's argument that "a collective licensing solution, because it would create an environment where intermediaries would have market incentives to "bundle" licenses with other products and services, would do a better job "enforcing" copyrights -- that is to say, getting people to pay rightsholders" falls short. It reduces copyright infringement by encouraging people to be legit (and most importantly, makes it extremely EASY to go legit), but without the threat of punishment, it has no teeth to deal with users that don't convert. If massive lawsuits don't encourage them to go legit, paying a fine probably won't either (if enough people go legit, however, it might, because the risk analysis changes- i.e. your fining a smaller group of users, and therefore the risk cost of illegal file sharing goes up per-person, see the comments on lessig's post for more). Tracking files of illegitimate and legitimate users might make enforcement easier- and encourage some enhanced version of the RIAA's "amnesty" program as opposed to wreckless lawsuits- but copyright still needs to be enforced, and von Lohmann is too vague on the issue to be of much guidance.

2. Applications that continue to encourage illegal file sharing: If the pay-to-play structure becomes popular, BitTorrent and Donkey-esque applications may become more suspect in that they continue to allow illegal file sharing with cost-reasonable filters (if these filters are, in fact, cost-reasonable). Not only this, but there are sites like www.mp3search.ru that are based in other countries with differing copyright law, allowing American users to in essence receive music under Russian regulations (and low Russian prices). For the BitTorrent like sites based in the States, we may see an increasing shift towards more scrutiny over what qualifies as acceptable software, and that may stifle invention. Conversely, the burden might shift away from software to the customer, who now has the opportunity to use such software in legal ways and refuses to (but again, this comes back to problem of what regulation is effective). For the Russian sites, the U.S. would have one hell of a time taking them to court, so by default the burden will likely fall on the U.S. consumer.

How will that burden be meted out? Hard to tell- but if I had to predict, it will be an amended version of the "amnesty plan" of the RIAA, with more corporate involvement. The erroneous lawsuits may still remain, but their support, both publicly and pragmatically, may erode as the pay-to-play structure becomes popular. In the end, the questions raised in this post are more logistical than substantive... I'm convinced the system that the EFF advocates will work, its just a question of the few instances in which it does not work. Hopefully, programs like Sony and Play Louder's will progress quickly enough that we'll see these questions raised in the next couple of years, because until then, the RIAA is showing few signs of slowing down the rampaging fines.