Simple Rules for a Kazaa World


LawMeme links to a paper on copyright law by Case Western prof Lydia Pallas Loren. The argument in a nutshell is that the convoluted state of copyright law, which raises transaction costs unnecessarily, is a major obstacle to the provision of low cost alternatives to illicit file trading.


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  1. Not being a lawyer myself, the concept of “intellectual property” is a vague one to me. Being a writer and musician, however, I am sympathetic to the idea that artists, and all those who make their living bringing artistic works to market, are entitled to the fruits of their labor.

    I talked to the fourteen year old daughter of a friend of mine who uses Gnutella pretty extensively, and she gave me what I believe is the most cogent argument in favor of file sharing I have heard.

    “If I buy a table,” she says, “I can use it how I like, sell it, give it away, even take it apart and make copies of it in my own workshop, and give those away if I want, or even sell them.

    “Or,” she goes on, “If somebody *gives* me a table, I have the same rights to it. At least nobody would sue me for acting as if I had all those rights. What’s the difference between that and downloading songs?”

  2. Well, the difference is that you can’t near-costlessly copy tables, and that transaction costs (given that most of the future buyers don’t know who they are yet, beyond he sheer coordination issue) make it impossible to contract for all potential buyers of a song to pay a share of the cost of producing the first copy (the ONLY one that sells in a world of unrestricted copying). It’s actually kind of funny: the mistake that hardliners on both sides of the IP debate make is assuming that somehow the rules for intellectual property are or should be like those for physical property–on the one hand, that we presume fee-simple ownership that includes acts like copying, and on the other that it should be perpetual (or damn near perpetual) for the original artist.

  3. I understand that file trading requires you to give something of value (your MP3s) in order to get something of value (someone else’s MP3s). How is this not a commercial transaction?

    Re: table metaphor – in this case, the design of the table is patented, and other people are giving you stuff in exchange for the tables you make.

  4. Agreed, the two cases (IP vs. physical property) are not identical, or even similar, but those concepts are awfully damned abstract to expect RIAA’s main target audience to grasp.

    My observation ( I was a high school music teacher for 13 years) has been that teens in particular regard ownership of music or movies on physical media as owning a piece of physical property, and there is some logic to the “table” argument, looked at in that way.

    Contrarily, the same constituency tends to regard online file sharing without permanent physical media the way they might feel about getting a drink from a water tap on the side of a neighbor’s house. They understand in a vague way that it’s wrong, but what they are getting is fluid, dirt cheap in and of itself, and ultimately comes from a common pool.

    Any transaction must be based on a meeting of minds. What this article says to me ( as much as I was able to glean from my scanning the paper ), and what I understand from my young friend and my former students is that there is no meeting of minds at all between RIAA and its target audience. This inherent error in communication between buyer and seller make it difficult for the market to arrive at a reasonable price/cost scheme, not to mention leaving both sides feeling ripped-off and abused.

  5. joe,

    I don’t “give” anyone mp3’s in file trading, I only allow you some of my bandwidth to make a copy. When the transaction is done, I still have the mp3 I started with, and you have a copy.

  6. Russ, you are still giving something of value, in return for something of value.

  7. Well, plenty of file traders don’t share anything. But fine, call it a “transaction” or even a “commercial transaction”… what does that have to do with anything?

  8. Julian,

    Traditionally, making copies for your own use, or even to give away, was considered fair use, but making copies to sell (ie, get something of value in exchange for letting someone else have a copy) was a copyright violation.

  9. Hmm, fair. But that’s not really the way Kazaa and so on work… there’s no song-for-song quid pro quo. How much you download bears no necessary relation to how much (or even whether) you share your own files. And the parties aren’t the same: most of the time, I imagine, you’re downloading from someone who’s never downloaded one of /your/ files, and vice versa. Or if you both have, it’s more or less accidental; I don’t think many people outside the RIAA pay attention to whom they’re sharing with in either direction. So, if this isn’t splitting hairs too much, it’s more like a series of gifts (I got you something for your birthday; you got m something for mine) than a real transaction.

  10. Good answer, J! I’ll take your word on the specifics, since I buy my music the old fashioned way. (I like cover art, lyrics, etc.) Perhaps a legal distinction can be drawn based on whether downloaders are required to provide songs in order to gain access.

  11. Hmmm, Russ makes an interesting point, though, albeit by accident. What legal grounds are there for preventing a network user from willingly lending bandwidth and access to his/her hard-drive? There is no way to prove intent to share a particular copyrighted work.

    Looked at it that way, it could be said at least that the uploader has no liability, and therefore the “transaction” is only one-way, meaning it isn’t a transaction at all.

    Of the 200-odd “file-sharers” who have been sued, I wonder if any are being sued for allowing access to their files for uploading as opposed to downloading, and what the basis of the complaint is. Something smells wrong to me if it is illegal to download something to which it is perfectly legal to grant access, but then, I don’t have a lawyer’s mind.

  12. Another interesting bit of this to me is that KaZaa is the culprit of choice now, since it is web-based, is notorious for being spyware, and is easier to trace than, say the Gnutella “network,” of peer-to-peer users. Seems KaZaa users are being picked on, at least in part, for using inferior technology, a right RIAA seems to want to keep all to itself.

  13. The lack of IP hardliners on this thread, declaiming Reason staffers as inherently amoral libertines for entertaining the idea that P2P may not be entirely evil, is refreshing. As is the commentary so far. Thanks for keeping up this debate!

  14. Actually, I think all the people who’ve been sued are sued for the songs they were *sharing*, not necessarily for having downloaded anything. It is an interesting argument, though: you’re allowing people to make copies, and at least some of them, presumably, have a right to do so. (If I own an album, presumably I can make a copy to keep at the office or whatnot. By extension, it seems equally legit for me to download someone else’s copy of the music I’ve already bought to my work computer rather than bringing it in and ripping it to the hard drive myself.) The sharer, one might argue, is in the position of a library (or just a friend lending an album to another friend): someone certainly might borrow a short book and then make a photocopy of the whole thing to keep. But that’s not your responsibility. I somehow doubt it’d fly in court, though.

  15. Dave S. – As I said, I am a writer and sometime musician myself, as well as a computer nut who, occasionally, has availed himself of a hard-to-find-in-the-stores musical selection or two via pals on Gnutella. I see merit on both sides of the argument.

    I think Apple has it about right with its Apple Music Store. More kids have consciences than one might think, perhaps unlike some RIAA members and spokespeople, and many would jump at the chance to pay 99 cents for a tune they really want. Particularly so if the download is fast, reliable, and doesn’t screw with their computer, and given that they have reasonable rights to use the selection as they see fit – all of which Apple offers. Hopefully this will roll out to WIndoze users soon.

  16. Julian –

    Wow, if true, that throws a whole new light on the subject for me. Do you realize this implies that anybody who logs onto any network and grants access to other users is potentially liable as a “file-sharer?” Somebody’s breaking some pretty sleazy legal ground here.

  17. Copyright is nothing more than a state granted monopoly. It is wrong, period. The argument that creative people need it to profit from their efforts is bogus. Creativity continues to thrive where there is no copywriter protection, perhaps even more so because of (the lack of) it.

  18. Warren –

    Try to get a book published, and when you succeed, try to make enough money on it to be able to afford to write another. Or, pitch an idea for a feature story to an editor, have it rejected, then read your story in the Sunday paper feature section done by a staff writer. Then we’ll talk about whether copyrighting intellectual property is “wrong.”

  19. If no guitar player, record company executive, or hot 19 year old with a decent voice made more than $75,000 per year, music would almost certainly be better, not worse.

    Just an observation.

  20. joe – I tend to agree, although I have no qualms in general about anybody charging whatever the traffic will bear for quality in any realm.

    It is interesting that the front people testifying for RIAA in Congress have been old hacks like members of Metallica and the Eagles who have already made their pile and want to keep milking the thing as long as they can. Most small-timers and up-and-comers love the ‘net, as it is a great way to get music heard that ordinarily would not be.

    I rather like the ads on t.v. now regarding respecting copyrights for DVD movies. They feature set painters, caterers, etc. pitching the fact that it isn’t just the stars trying to make a living in the movies. A lot of folks feed their families by working in supportive jobs on movie sets and offices, music studios, distribution companies and radio.

    Like I said, I see both sides of this issue. Fascinating topic.

  21. Jeff,
    Book publishing is doomed. As is the point of the original post, copyright is getting in the way of creating online publishing that authors would profit from directly.

    Copyright only applies to what’s been written. Just because you pitch an idea about doing a restaurant expose, that doesn’t mean the paper has to pay you every time the run one. So copyright doesn’t help there anyway.

  22. Clearing up a few misconceptions:

    joe – copyright law has never cared whether you made copies for profit or in exchange for something else. It has only ever cared whether you had the right to make copies. It is a violation of copyright law to give unauthorized copies of a protected work to nuns and orphans.

    Jeff – what your daughter (and damn near everyone else) doesn’t understand is that she doesn’t own the songs. She has a license to listen to them and make copies for fair use. It is rather like saying that someone who rents a car or a house has the right to sell it and keep the proceeds.

    Warren – all property bottoms out in state granted monopolies. Property is inherently monopolistic – it is the exclusive right to use and dispose of something. Most any chain of title to real estate can be traced back to a grant from a sovereign – the old ones are really cool, handwritten and signed by the king or a President. IP and copyright are not unique in this regard. If you want to throw IP overboard, you would be well advised to find grounds for doing so that are unique to IP.

    Julian – your “series of gifts” could also be a description of the business doings of any Mafia don or corrupt city councilman. This is what lawyers would dismiss as a “pretext” or a “sham.” Try not declaring income sometime, and telling the IRS it was just part of a series of gifts – you give your employer some time, he gives you some money, what the hey?

  23. joe,

    Was the value the mp3 or the use of my bandwidth? Or is a certain percentage assigned to each? If so, how was the percentage assigned?

    I just think “value” is a personal thing, a grey area that one person can’t define for another. If you offer me something for 50 dollars, I can say “forget it”; offer me the same thing for 50 cents and I may be more likely to consider it. Whether or not that helps you recoup your production costs is of no concern to my judgment of its worth to me.

    I know a lot of collectors who place no value whatsoever on the “music”, only on the artifact that contains the music.

  24. RC – If you read my early posts, you just reiterated my point, that my *friend’s* daughter, and presumeably her peer group, indeed does not understand these fine distinctions, and that they can’t be expected to. To me, this points out a flaw in the distribution system as much as it does the moral characteristics of the average teen.

    YOU try explaining to a 14 year old that she bought a CD for fifteen bucks of her own money, and then can’t do what she wants with it, and that there is a distinction between her owning the recording itself, and the piece of media that it sits on, but not owning the *song.*

    Have some Advil handy when you try.

  25. “If no guitar player, record company executive, or hot 19 year old with a decent voice made more than $75,000 per year, music would almost certainly be better, not worse.

    Just an observation.”


  26. “without some flavor of original and exclusive rights of the artist – we needn’t call them copyrights, how does any kind of artistic economy work? ”

    The same way the fashion industry works now. Very capitalistic, plenty of creative output, and artists making fistfuls of cash without government thugs putting the competition out of business. It works just fine.

    It is totally bogus to say that people will stop composing and writing if the copyright monopoly is dismantled.

  27. “It is totally bogus to say that people will stop composing and writing if the copyright monopoly is dismantled.”

    I never said that, Warren. Nor did anyone else here, I think.

    Um, I believe Donatella Versace would be surprised to learn she doesn’t have exclusive rights to her designs and fashion lines, as your take on the fashion industry suggests.

    Incidentally, it is debatable that a copyright is simply “a state granted monopoly.” It is just as viable to describe it as a natural right of an artist enforced by government, as that is what government properly does.

  28. Uh, Warren –

    Fashion was the wrong example. You got Customs thugs siezing millions of dollars of goods; local police breaking up purse parties and so on.

    The fake Gucci bags and fake ‘Chucks that float around in developing countries and in the under-the-table flea markets in seedier parts of the US are both illegal under US copyright laws and represent profits substituted away from the design owners. It also represents freeloading off of established marketing and branding budgets; as well as watering-down of some of the cachet of the brand. Three distinct categories of economic losses.

    Though bonus points if you can tease out if the Brazilian “All Star #1″‘s are in fact a counterfeit Chuck Taylor All-Star shoe; or a legitimate example of trademark protection within the sovereign state of Brazil, that the big bad American yanqui Converse brand can suck on. What do you suppose the WSJ would say?

  29. Comparing having a huge library of files available for thousands of unknown people to copy to the fair use of making a copy for your buddy down the street – or even your 10 best friends is quite a stretch.

    The argument was made above that the host or up-loader was not at fault because he or she was just opening a channel to their drive and is not responsible for the actions of the down-loader. This doesn’t hold up when you consider that the host downloaded and installed the P2P software and installed it. And in the set-up process specified which specific directories would be shared, then loaded those directories with MP3s. You cannot access the files on another users computer unless that person has taken the direct action of launching the file sharing software. Also P2P gives the host the ability to stop a download at any point. So the calling the host an innocent bystander is B.S.

    For other rants on this go Here.

  30. RC-
    That’s true, but not really to the point. Of course, it’s possible to *claim* a genuine transaction is a “series of gifts.” But you can’t just point that out; you’ve got to produce a reason for thinking a particular such claim is bogus. Again, many people download without sharing anything, and since sharing isn’t a requirement, anyone who *does* share is doing so gratis. They’re not getting anything by doing so that they couldn’t get without sharing. So… how exactly is this a sham?

  31. Without IP protection, there would have been no Britney Spears. Is not that justification enough?

  32. PLC has a point.

    As usual, StMack does not (though I’ve never seen his head)

  33. “believe Donatella Versace would be surprised to learn she doesn’t have exclusive rights to her designs and fashion lines”

    No she wouldn’t she well knows that anyone can copy her designs and sell them at knock off prices. Sears and JCP do this all the time. Yet Ms. Versace still manages to eek out a living.

    “The fake Gucci bags and fake ‘Chucks that float around in developing countries and in the under-the-table flea markets in seedier parts of the US are both illegal under US copyright laws”

    Wrong. Those are violations of trademark laws. I have no quarrle with trademark. Every singer should be able to sing “Don’t know why I didn’t come” but only one can bill herself as Norah Jones.

  34. Warren, have you ever heard of LICENSING????

  35. Yes, he has. What’s your point?

  36. D Lusional,

    Care to take a stab at debating ANYTHING I wrote or are you going to stick with asinine juvenile insults?

  37. Can’t do it. Having to much fun calling you names.

  38. So Warren. Say you are an author, you write a book, and send it to your editor for publication.

    He agrees to pay you a royalty for every copy that is sold.

    Sadly, only one copy gets sold, because a new “book sharing” service called “Kinkozaa” allows everybody to make a copy of the book very cheaply, using digital imaging of the pages, and allowing unlimited free downloads.

    I assume you would be okay with this, because it’s exactly what is happening with music. Comments?

    And while you are at it, can you explain why I shouldn’t be allowed to come over to your house with my hippy-ass friends, smoke a bunch of dope on your lawn, camp out, crap in the roses, and then leave in the morning? After all, I’m just using your property, not taking it from you permanently.

  39. Errata:

    Lydia Pallas Loren is not a professor at Case Western Reserve University School of Law, but at Northwestern School of Law at Lewis and Clark College. The article was published in Case Western Reserve Law Review, which takes submissions from anyone, not just the CWRU (“kroo”) community.

    BTW, greetings from the Case Western Reserve University School of Law. I think I’m the only market anarchist in the bunch. 🙂

    – Josh

  40. Jeff: Those ads in the theater are crap. The set painters, etc. get paid before the movie ever reaches the cineplex. The ONLY way they lose mony is if production companies stop making films altogether. Do you think that will ahppen any time soon? Didn’t think so.

  41. nm156, the fact that they are not going to stop making films – or music – anytime soon just because people are copying them is hardly a good argument in favor of what is essentially theft.

  42. Adding to Stmack’s response to nm156, even if they don’t stop making movies (of course they won’t) the less profitable movies are, the less the crew will get paid as time goes on.

    A big part of the problem that I think everyone is missing is corporate ownership of copyrights. If the copyright is held by the author, it lasts for 20 years after his/her death. If it is held by the corporate person, which never dies…it never enters the public domain. This gives corporations every incentive to coerce artists to grant them the copyright rather than dealing with the artist on fair terms for use of his or her copyright. Oh heck, Orson Scott Card says it much better than I:

    I have been using, but the copy restrictions interfere with my fair use (if I upload the song to my website, people must upgrade the DRM components of MS Mediaplayer in order to have a listen to the song; this leaves their ability to use copy-protected music on their machine, even legally, vulnerable). If they would a) make more (all) music available for legal (pay) downloading and b) make provisions for fair use, all of this hullabaloo would go away.

  43. Ron C

    I agree though I prefer Apple’s Itunes music store. there are restrictions on copy the files but that’s not an issue for me. I can have a copy at work and a copy at home. If I win the lottery and buy an ipod I can make a copy there too.

  44. I remember reading Film Comment a couple years ago, there was an article about bootleg tapes of films, the kind you find on the streets for 5 bucks a pop. You know, the ones where someone brings a camera into the theater and records the movie playing.

    They actually made a case that you could consider this completely separate entertainment from the film, because you get the recorder’s comments (and bad filming) as well as the audience. And each recorder’s version of “Titanic” will be different. Like the Rocky Horror Picture Show in the 80’s, the entertainment wasn’t the movie, it was the audience.

    Or it’s like a blow job (or any service). In itself it isn’t intellectual property, but a film of it is.

  45. Julian – my comment about the “series of gifts” was intended mostly to show that this justification cannot possibly cover the entire range of file sharing activities. If there is a mutually beneficial exchange of “gifts”, such as when you both download songs and allow others to download them from you, then I think the rationalization that we are all just gifting each other becomes very hard to sustain.

    In any event, copyright law does not allow you to just give away unauthorized copies of a copyrighted work in any event, regardless of whether you get anything in return.

  46. One thing that I haven’t seen brought up is who is the violator in these situations. Who is the burden on to check for a valid license. The issue that I’ve brought up a few times (not here, I don’t think) is whether it is a fair use to download a copy of a song you have already bought the CD for. For instance, if I’m listening at work, and have a CD at home that I want to listen to a song from, is it fair use to download that song and listen to it? Personally I think yes, and that would be a valid use of P2P software. The issue is that the person who possesses the unlicensed copy is the one who has ‘stolen’ the music. Or perhaps I order it from, and in the intervening time (for shipping) I still want to listen to it. Could I download a copy of the song and still be within fair use doctrine? RC mentions that copyright law doesn’t allow you to give away works, but isn’t that based on the assumption that the person receiving them DOESN’T have a valid license to possess those works. I personally think the possessor should be the one responsible for having the license, and that it’s not the person who is sharing their drive who is ‘on the hook’. Now, I know this doesn’t jibe with the historical enforcement policies of copyright violations, but if we’re talking about changes in copyright law (which I think is something that is absolutely necessary, given the rise of this digital age) then perhaps we need to change the focus.

  47. Stephen Fetchet,

    In your last example, you are pointing to the central difference between genuine property and IP. Your front yard is tangible, finite, and spacially defined; someone else’s occupancy and use of it is exclusive of, and at the expense of, your occupancy and use. As the prior occupant, you have the right to maintain occupancy without being forcibly deprived of your occupancy and use. But not only that: by the very act of occupancy, you are holding possession against any prospective attempts by others to take possession. The only way for them to take possession is at your expense, and forcibly–and you can uphold your property rights simply by forcibly maintaining possession.

    To defend your “property right” in a song, on the other hand, what do you have to do? INVADE the physical property of someone else, to stop him from performing a series of mouseclicks and keystrokes on his own computer.

    Now, I’m not a hardliner to the extent of denying the possibility of a *contractual* agreement not to copy a book or song you buy for commercial distribution. But a voluntary agreement between individuals to do or not do a thing is far different from a grant of pseudo-“property” rights by the State.

  48. I believe that when we ask if the sharing is fair, we should also ask: fair in what sense? In a market economy the fairest way to ration a good is the one wich makes it accessible to the most people at the best price. Would the “culture” of the world increase or diminish if copyright laws were abolished? If everybody thinks that it would increase, I don’t see how we should call it unfair to abolish them.

  49. “Say I write and publish an original song, I contract with a record company to distribute it, and am promised a royalty for each copy sold, or each instance of airplay. Without some sort of copyright law to back up the contract I’ve just entered into, how can that contract be enforced? What is the market incentive for any creative person to bring anything to market at all.”

    It is precisely the ‘market incentive’ that has destroyed creativity, especially in music. The industry is full of talentless bands created by managers because they know they can make a quick buck with the assembly of pretty faces.

    There shouldn’t have to be a market incentive. Truly creative people will create for the pleasure of creating, not for the financial reward. Giving birth to children doesn’t earn you any money and nor should giving birth to a song. The music industry is full of millionaires, and we’re used to it, so used to it, but we shouldn’t be.

    People go to medical school for years and bust their ass to be able to perform skills and aquire knowledge that is genuinely valuable to others. Britney Spears flashes her tongue and boobies and earns 10 years of their salary. And it’s not creative.

    Artists should earn their money the old fashioned way – by putting on concerts, like Beethoven and Mozart, who I don’t recall selling CDs. Even today, Ani DiFranco survived without signing a record contract, and she despises the financial incentive as much as any truly creative person.

    File sharing is no different than recording songs off the radio or MTV, or people that take photocopies of books at the library – with the photocopier they provide. Metallica can cry me a river.

  50. EMAIL:

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