Tiffani Lewis
Sidney Bennett
Mahan Houseini
Peter Fanous

Case Study: MP3 Downloading and Napster

Introduction

Amidst the hot debate about whether or not music should be free, there are ethical and moral considerations as well. MP3 music downloading has become the latest fad for computer owners. One computer site where users can download MP3 songs is Napster. The emergence of digital entertainment, whether an MP3, Liquid Audio book, or streaming video, has caused an inevitable shift in the entertainment market from a commodity base to a service base. One reason is that the digital medium eliminates acquisition cost for the consumer. A perfect copy of the original good is automatically created upon request. Using open platforms and formats, new companies in the entertainment sector have literally bypassed traditional production and distribution channels to reach the consumer. Napster is the perfect example of this new paradigm, turning every member’s computer into an audio server and distributing an individualized playlist. However, this trend seriously limits a content owner’s ability to restrict the supply of his/her intellectual property on a large scale and thus control it. In response, the music industry has resorted to litigation and restrictive usage rules on licensed or retailed digital products.

An ethical analysis using the theories of the Libertarians, Utilitarian, theorist Nozick’s view of ownership, Egoists, and the theories of the German idealist philosopher Kant can help in solving the MP3 debate. Moreover it can help in concluding whether or not a violation of ethics has occurred.

Relevant Facts

The music industry continues to be characterized by commodity pricing. This is largely due to the fact that major label revenues are predominately derived from CD sales. As such, the focus of the industry’s online strategy has been to prevent CD sale cannibalization through control of online product supply and distribution. In the absence of this control, copyright owners would be unable to maintain pricing control. As a result, the industry has taken the lead in defining new rules for online digital distribution that would replicate conditions existing for off-line digital distribution.

There are concerns over two factors, access to and the use of content. In the traditional model, content owners determine a price at which they will make content available to consumers. A consumer in purchasing the content copy acquires certain rights over the property and usage of the content. Under the First Sale doctrine, copyright owners relinquish exclusive rights to sell and distribute the purchased copy. The First Sale doctrine illustrates the contrast between the commodity and digital markets, while Fair Usage doctrine dictates how copyrighted material may be used by the consumer. When a consumer redistributes their purchased copy, they must actually relinquish and transfer their rights under the doctrine to the new owner, unless an additional copy of the work is made. The supply of CDs does not change, there is simply a transfer of property rights.

However, in the case of a digital good, lets say an MP3, there is no relinquishing of the purchased copy as copying and distributions are a single function. The consumer retains their First Sale rights over the original copy as well as imparting those same rights to the owner of the redistributed copy. Thus, the copyright owner in reality loses control over its monopoly right to dictate the manner in which the copyrighted work is distributed, and consequently its market price.

The Recording Industry Association of America (RIAA) accuses each Napster user of direct copyright infringement. But rather than attacking individual consumers, the RIAA aimed for the source, charging Napster with "contributory" and "vicarious" infringement of copyright.

The first step in the RIAA's legal battle is to prove that Napster users are engaged in copyright infringement. If they are not, that is the end of the lawsuit because there must be an underlying infringement for there to be contributory or vicarious infringement. According to the RIAA, anyone who uses Napster, even for a few minutes, knows immediately what Napster and every other Napster user knows; massive copyright violations occur on Napster - not sometimes, but all the time. The RIAA contends virtually all 38 million Napster users are copyright infringers because the vast majority of files shared, downloaded or uploaded on Napster are unauthorized MP3 files of copyrighted music. Napster defends its anonymous users, arguing these activities are "fair use." Napster relies on the Audio Home Recording Act (AHRA), which says private, non-commercial copying is fair use. The AHRA provides:

No action may be brought under this title alleging infringement of copyright based on the manufacturer importation, or distribution of a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium, or based on the noncommercial use by a consumer of such a device or medium for making digital music recordings or analog musical recordings. 17 U.S.C. §1008
 

The RIAA responds that the AHRA does not protect Napster users for two reasons. First, the RIAA argues that the AHRA protects only digital audio recording devices, which incorporate technology to control second generation copying. Computer hard drives are not included in the statute's definition of "digital audio recording devices." Napster, and perhaps the Internet generally, are outside the purview of the AHRA. Second, the RIAA points out that the AHRA shields private home copying, but does not immunize widespread distribution of copyrighted music to millions of strangers.

The Napster Internet site avoids direct contact with pirated music; thus it cannot be sued and held liable for copyright infringement. Instead, the Napster software helps the end user locate and download MP3 files on other users' computer hard drives. This argument creates a loophole in the copyright law and is one of the reasons why the RIAA is suing Napster under contributory copyright infringement. Napster provides all of the means for the exchange of pirated music without touching it. Users download the Napster software to their computer hard drive and then the installed software scans the hard drive for MP3 files, authorized or unauthorized.

Napster has found another loophole in the law. The Digital Millennium Copyright Act (DMCA) states that it is not the job of the Internet Service Provider (ISP) to scrutinize and police what is on the Internet; the responsibility belongs to the end user. The DMCA provides that it is the responsibility of the person or artist to tell the ISP or other Internet company that they are using unauthorized music on the site.

Ethical Issues Presented by Relevant Facts

"I’m in the business to make money, and Napster is fucking that up."

-Dr.Dre
 

Is Napster stealing money out of the hands of the artists? What is Napster stealing, money or music or both? Metallica and Dr. Dre have overtly opposed Napster, saying it is taking money away from them. Yet since Napster’s emergence, record sales have increased. While Napster was being accused of facilitating copyright piracy and undermining sales for music companies and copyright holders, the RIAA announced that shipments of full-length compact disks in the U.S. reached an all-time high in the first half of 2000, up 6 percent from a year ago. The music industry sold 420 million units. CDs comprised 86 percent of the total music purchasing market and the dollar value grew 9.9 percent to nearly $5.7 billion. Even if Napster was decreasing sales, the artists themselves would not be losing money, it would be the record company. A record company uses money made from record sales as payment for video shooting, promotion, or general debt the artist owes the company. The artists make most of their money from concert ticket sales and various merchandise. While more then half of college students (58%) have used Napster to download online music, 79% still buy music on CDs." Out of 1,135 students polled, two thirds said they download songs to preview them before they buy them.

"These have been the most frustrating weeks of my life. Everyone thinks this is about the money. It’s not. I’ve got more money than I could spend in seven lifetimes. The issue is control. We want to control what we create. I couldn’t believe that other artists were passively watching from the sidelines. Just because the technology lets you take my music doesn’t mean you have the moral right to do it."

-Lars Ulrich (Metallica-drummer)
 

The music industry has said that they are not so much worried about their record sales, but the right to release their new music when they want to. Dr. Dre, a rap artist with Interscope Records, claims he had to change half of his new album, "Chronic 2001," because subscribers to Napster had somehow obtained this album. Eminem, also with Interscope, claims the release date for his album "Marshall Mathers LP" was delayed because Napster’s subscribers already had most of his album before it hit the record stores. Metallica became angered in June after versions of the band’s song for the "Mission Impossible 2" soundtrack were stolen from the recording studio. Drummer Ulrich and his attorneys discovered the songs were being broadcast over several radio stations. Deejays tipped the band off to Napster, whose subscribers had digitized Metallica’s entire back catalog. Ulrich and attorney Howard King showed up at the Napster’s office and demanded that users found bootlegging the band’s tunes are immediately blocked from the service. Federal law says that if an Internet Service Provider gets a complaint about a person allegedly breaking copyright law, the ISP must remove that user from its service. But if the accused person thinks he has been misidentified (Napster) and submits a counter-complaint, then it’s up to the copyright holder, in this case Metallica, to decide whether to take legal action. Should Napster who provided this software without the intention of sharing bootlegged or unreleased music by its end-users be held responsible, or should the thirty-eight million end-users be held responsible for these songs slipping through the cracks onto Napster? Should the end users feel a moral obligation not to share music that has not been authorized for Napster’s use or do they have an obligation to the artist not to use the bootlegged music?

One may state that Napster is at fault because the company’s users are stealing the intellectual property of another person, mainly the musicians who create music. However, what exactly is intellectual property? As defined by Webster’s dictionary, intellectual means "of or pertaining to the power of the mind to grasp ideas and relations, and to exercise rational judgment." So what does this exactly mean? With a definition of intellectual we have a starting point from which to proceed, but how is the ability " to grasp ideas and relations" linked to property or ownership. For the purpose of this case study, the defendants, certain musicians, are using intellectual property to define a musician’s right to their music. The finished song can be called the "brainchild" of the musician, which in turn is deemed intellectual property. So the artist who creates owns the rights to the song in every form. In appraising the validity of the intellectual property argument, one must take a look at exactly what the notion of intellectual property means.

One might say the finished product, the song, does become tangible when taped onto a CD or in MP3 format. While recognizing the term property is not restricted to material objects, we question at what point a song or album, as an idea, becomes tangible. We pose this question because albums can be bought by anyone, therefore becoming the property of the buyer. Thus, if after purchase, the album is the property of the buyer, does he not have the right to do with it as he pleases? Napster’s answer is yes. However, it is recognized that the person who buys the album does have limits placed upon what he can do with it. A person who buys an album and downloads the songs onto the computer to share with friends does so of their own free will. A will in which Napster has no control over and with the Internet as such a new commodity with few rules the will to download is not seen as infringement. The whole question of intellectual property hinges on the notion that ideas have value and can be owned.

Introduction and Explanation of Applicable Ethical Theories

The Libertarian, or Lockean, view says that there should be no interference in uncoerced exchanges between two consenting individuals. Property rights equal that of moral rights, either reflecting a person’s initial creation, or appropriation of the product. The CD product was appropriated from the artist through a purchase, therefore, becoming the rightful property of the buyer, which the Libertarians view as fair and just, as well as moral. A person is not buying the copyright to the artist’s music, but a copy of the music’s performance. The consumer buys the right to use the CD within certain limits. Since the Internet is a new tool for acquiring music and with little legal direction about the relationship between online materials and copyright infringement, the legitimacy of sharing purchased CDs with others becomes hazy. Nevertheless, libertarians say that the idea of appropriation exists prior to any social arrangements and is morally antecedent to any legislative decisions society makes. The theorist Nozick’s might ad that ownership and property rights can become applicable to the Napster case by applying the principals of justice. He states that a person who acquires a piece of property is entitled to the property. Additionally, a person who acquires a holding in transfer from someone else is similarly entitled to the property. Under this premise, a person who downloads a song that was placed on Napster by a customer who has legitimate rights to the music, because the CD originally became "another’s" property through a monetary transaction. Locke does say that a person has a right to property based on the labor he/she has put into the work, that individuals who mix their labor with the natural world are entitled to the results. However, Locke also believes that if Brittany Spears sells her album to a girl named Beth, then Beth can do anything she wants with the album because it was appropriated fairly, assuming that the CD was rightly appropriated. Locke specifically states that if you obtain property without violating another person’s rights, you are entitled to the property and may dispose of it as you deem fit, either by selling it or just giving it away. No one else has a legitimate claim to your property after it is rightly appropriated, thus validating Napster and the downloading of materials off of web sites.

Utilitarians also believe that property systems exist, but there is not a natural right for things to be owned privately, collectively, or in any other particular way. The moral task of the people is to find a property system and distribution vehicle with the greatest utility. Napster’s system fits a Utilitarian definition. Napster promotes distribution to the greatest number of people, and the greatest use for music is for it to be heard and enjoyed by as many listeners as possible, thereby maximizing the utility of the product.

The legal and moral issues of downloading music have expanded to include universities and colleges because downloading happens to be an immensely popular practice among students who employ the Internet access provided to them by the universities and colleges. College Internet systems make it easier and faster to gain access to a virtual library of songs and compact discs for free. Since the Internet is being used for downloading purposes, which the record companies and the RIAA deems illegal, universities and colleges across the United States are being sued for infringement of the laws based on what their student population is doing. Howard E. King, the lawyer for the artists suing the colleges stated, "colleges have a moral, ethical, and legal obligation to ensure that copyrighted material, including music, is not freely exchanged on their campus networks." Therefore, to protect their own interests, universities are beginning to monitor what students are doing.

Universities need not become moral police because Safe Harbor provision of federal law protects universities. The Safe Harbor provision "exempts Internet service providers from any liability for criminal activity that takes place over its Internet connections." Therefore, anything that is illegal, such as downloading copy written material, would not be looked upon as the Universities’ fault. Instead the individual responsible would be at fault and dealt with by the law. So why are universities continuing to check the traffic of activity that occurs on individual students’ computers without letting the students know? Oklahoma State University police confiscated a student’s computer because the allegations were made by the RIAA that it was used in the distribution of copyrighted music. Also, Penn State officials are questioning students and faculty whose computers show nothing but heavy file transfer traffic. The school has also begun to warn computer users not to download from Napster or else they may have to deal with serious penalties from the University.

Most universities say that they are dealing with a problem of too much bandwidth going to Internet downloading instead of to research, studying for school, or related activities, such as homework. This is a true statement for some of the Universities blocking Napster, but not for all. The vice president for academic affairs at Canisius College stated "We are talking about a very subtle moral debate here in which reasonable people can disagree." The Liberal Arts College in Buffalo, NY has also blocked Napster on ethical grounds. Not all universities debate the moral issue when blocking Napster. Indiana University was planning on banning Napster from its system using the rationale that the current bandwidth was not large enough to hold all of the traffic occurring because of the music downloading.

Should universities have the right to check up on where students go on the Internet? Do students have an obligation not to do certain things with the Internet access provided by their schools? In response to the widespread controversy over Napster and other Internet file sharing programs, many colleges and universities have taken action to regulate the use of these Internet sites by their students. Three large and well-respected universities were sued by the music group Metallica for allowing their students to use Napster, and therefore download the group’s songs free of charge. These schools, Indiana University, Yale University and the University of Southern California have since barred the use of Napster by their students. Several other colleges have not set up firewalls blocking the Internet site, but have instead chosen to monitor the websites that students access from their dorm room computers. There are of course many objections to the universities’ actions and their policies.

In an interview, Carl Benincasa, a student at George Washington University believes, "Universities have no business monitoring where their students go on the Internet. The reason that the Internet is so great, is that you have the freedom to go wherever you want on it." When asked about his opinion on the Napster issue in general, Mr. Benincasa said, "I think there are some problems with it because it is taking profits away from the people doing the work, but regardless I will still use it as long as it is allowed. That doesn’t change the fact that schools shouldn’t be allowed to check up on what kids do on the Internet."

Pete Carver also a student at the George Washington University said, "Most kids know

downloading music is not probably right. They realize they’re getting something without paying for it, but I think using Napster is not stealing because it probably helps a lot of the bands out there because it gets their music heard, just like it were being played on the radio." He went on to say, "The fact that students may not know some MP3s are illegal doesn’t make it all right. Claiming ignorance doesn’t get you off the hook."

A number of universities have decided that teaching their students about the moral and legal ramifications of downloading music from the Internet will help to curb this activity. This seems to be the most popular approach because it seems that students have frequently be able to find ways around fire walls and other devices set up to block Napster. Polley A. McClue, Vice-President of Information Technology at Cornell University was quoted saying:

If you stop and think about it, the approach that we’re taking will produce a more long lasting adherence to what the copyright holders want. If we were just taking down one piece of software after another there is no way that they would ever gain. If we can educate people and produce a culture in which people have respect for property. In the end their interests are going to be much better served.
 

At the George Washington University, the Chief Information Officer, David Swartz, said the following in an interview:

A recent review of higher educational institutions indicates that approximately 50% of institutions have limited Napster, mainly due to the impact it is having on network performance. Others such as here at GW have a strong network infrastructure and so are not facing significant performance problems and so have decided to focus on educational efforts to curtail misuse.
 

Swartz continues, saying basically universities normally fall under the protection provided to most other Internet Service Providers and therefore should not have any liability to the record companies or artists.

One may wonder if universities are checking files for MP3s without the knowledge of the students. If so, what else are they doing while in the student’s computer file systems. With this question, many other factors come into play within the situation. First, the computers that students are using are their own property and as stated before libertarians, Utilitarians, and the Nozik theories find nothing wrong with the downloading of materials, especially when it occurs on ones own system. Second, universities are supposed to be a center for learning, a place where all forms of information are open for student use. Third, students are given the Internet at most schools as a part of tuition. Colleges and universities should be neutral providers of Internet service and by the Safe Harbor provision to the federal law they are. The individual is responsible and as Nozik’s entitlement theory states, the individual is entitled to do as they please with their own property.

Analysis of Issues in Light of Applicable Theories

Egoism is the theory that is viable since it focuses on the individual who wants to download MP3’s, regardless of the law or who might be injured in the transaction. Egoists are motivated by self-interest becoming involved in the process solely because of personal benefits inherent in the deal. They believe that the right answer to a moral quandary resides in what is good for them in the long run, regardless of how anyone else may feel. One can easily apply this principle to both sides of the MP3 case since both are playing the "me" card. Both the music industry and the people utilizing Napster are only interested in their own opinions and what will happen to them if Napster is either shut down or, conversely, allowed to continue. However, one cannot overlook the fact that conflict is a major part of this theory. In the end the yeah or nay issue has not only brought conflict amongst the battling entities in court, but also has precipitated conflict among many people all over the world who enjoy listening to music. We can divide the individuals into these three groups: Napster supporters, Anti-Napster supporters, and those confused or undecided. The rules governing what is allowed and what is not allowed on the Internet are hazy at best, particularly, since the Internet is a new expanding medium which people are trying to integrate into their lifestyles. Twenty years ago the United States was not challenged by this problem because the technology was limited to records, tapes, radios, and television. European and Asian countries do not have many problems with copyright infringement because in Europe and Asia, Internet privacy rules are very strict. As Americans we enjoy the luxury of freedom of speech, which in turn makes the content of the Internet open and subject to various interpretations about legality. No one wants to take away a persons right to free speech, since it is a foundation of our government and culture. Egoists do not want anyone to inhibit their personal rights and are only concerned with their own rights, making the theory one that can be applied to the MP3 case. However, it is not the necessarily the best theory.

Kant says that nothing is good in itself except for good will. Napster could say that their intent is to satisfy subscribers with free music; however, if they have any self-motivations, like high market value, then Kant would say their actions have no moral worth. He also states that rational creatures should always treat other rational creatures as ends in themselves and never as only means to ends. This would mean that the artists in this case are acting immorally because they are only using listeners as means to an end, obtaining money. This would also mean that Napster is using the artists as means to an end, without music generated by artist’s individuals would not need Napster. From both sides of the issue consumers are being used.

Utilitarian theorists support the ideal that an action in which the greatest good is done for the greatest amount of people is the correct solution or decision. Not only is happiness looked upon as a measurement of what should be done, but unhappiness is also factored into the problem. How many people will benefit from the decision to keep Napster open and functional for free downloading? Also, in conjunction, how many people will be unhappy if Napster is allowed to continue running in its current format? Using Utilitarian theory, both sides are looked at; neither side is given an upper hand. Maximum happiness now, as well as, future happiness is the driving force behind this theory. If Napster is shutdown, the record label executives and musicians who are bringing the lawsuit against Napster would be happy with the outcome, however, weighted against the 38 or so million Napster users, they are a minority. Under these conditions maximum happiness has not occurred for the most people.

Recommendation of Resolution

Will an end to Napster bring an end to music piracy over the Internet. Unfortunately, the answer is no. Napster is not the only program out there, which facilitates easy access to MP3s. Even if Napster is shut down, there are other programs to use to download and share MP3s. The best-known alternative is Gnutella. This program even goes beyond Napster and allows you to share MP3's or any type of file with others, live over the Internet. With Gnutella, you connect directly to other users' computers, without using a central server. Another program is iMesh. It works like Gnutella, allowing direct access to files on other users' computers, but is easier to set up and has a great-looking interface. Other programs are being developed on an almost-daily basis. The debate over intellectual property rights will likely continue for a long time, and a new model may be necessary to ensure that artists are justly compensated for their work. Napster may be forced to shut down, but the file-sharing revolution will live on.

This evokes the question of what is the best resolution. There are three resolutions, which would best fit this situation. The first and most obvious resolution would be to leave Napster as it stands. A second resolution would be to charge a membership fee to the end-user. This money could be used in part to compensate the record companies and artists for providing music. This would take away the "free" idea of Napster, but would still be much cheaper then the purchase of a CD. The third resolution is to limit the songs available on Napster to the songs available for play on the radio. New songs that an artist does not provide for radio will not be given to Napster. After an album has been sold in stores for over a year, Napster will have the right to use them on their software. These theories would all coincide with Utilitarian thought which ensures the greatest amount of happiness.

As an update to the Napster saga, Napster has agreed to team up with BMG to provide a secure membership-based service. The new venture would provide the Napster community with high quality file sharing while providing payments to right holders, including recording artists, songwriters, recording companies and music publishers. Napster and BMG are seeking support from others in the music industry to establish Napster as a widely accepted membership-based service and invite them to participate actively in this process. As this seems like an acceptable solution, all parties are ready to drop their suits against each other upon Napster’s full compliance. Therefore, a resolution to satisfy the opposing arguments could be to charge a fee for the use of the system.

Works Cited

Carlson, Scott. "Get ready for an encore of the Napster controversy" The Chronicle of

Higher Education. September 8, 2000. Washington.

Carlson Scott. "Metallica sues Universities and Napster, charging that students engage in

music piracy." The Chronicle of Higher Education. April 28, 2000. Washington.

Huffstutter, P.J. "Music Makers at Wits’ End in Battle With Internet Takers." Los Angeles Times Monday May 29, 2000: Part A, Page 1.

Kover, Amy. "Tech Report 2000: Idea of Napster." Fortune 26 June, 2000. Pg. 30-32.

Mlakar, Tracy. "Pulsefinder On-Campus Market Study." YouthStream Media Networks. Pg 24-28.

Schuyler, David. Bizjournals.com. June 9. October 10. <www.bizjournals.com/milwakee/stories/2000/06/12/focus3.

"Universities side with Napster." USA Today. November 02, 2000. Page A10.

Inverviews:

Peter Carver, George Washington University student. November 11, 2000.

Carl Benincasa, George Washington University student. November 11, 2000.

Josh Katz, George Washington University student. November 12, 2000.

David Swartz, George Washington University Chief Information Officer. November 28,

2000.