Time for the Recording Industry to Face the Music

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TIME FOR THE RECORDING INDUSTRY TO FACE THE MUSIC: THE POLITICAL, SOCIAL AND ECONOMIC BENEFITS OF PEER-TO-PEER COMMUNICATIONS NETWORKS

Mark Cooper Director of Research, Consumer Federation of America Fellow, Stanford Law School Center for Internet and Society March 2005

ISSUE BRIEF

PIRACY PANICS V. THE PUBLIC INTEREST

A critical debate over a technological revolution is underway in the U.S. that will have far reaching implications for economic growth and global competitiveness, technological innovation and creativity, and the capacity of an open, democratic society to adapt to breakthroughs in the way we communicate. This debate is over advances in peer-to- peer technologies and whether their growth will be driven by the capacity of human innovation or hindered by special interests reluctant to embrace change. This debate is unfolding in the U.S. court system, the halls of Congress at universities and research organizations, and among entrepreneurs everywhere from corporate boardrooms to the lone innovators looking for next great invention.

If vested interests in the recording and movie industries have their way, innovation and progress will be the victim of a public relations campaign intended to paint file sharing as "piracy." Big movie studios and recording companies are attempting to squelch peer-to-peer networks just as their potential to deliver economic growth and technological progress is only beginning to be exploited. However, contrary to the copyright holder claims that peer-to-peer communications networks are copyright infringement schemes, decentralized peer-to-peer networks have become the dominant form of Internet communications because they are vastly more efficient. Peer-to-peer technologies eliminate the congestion and cost of central servers and distribute bandwidth requirements throughout the network. In so doing they become a powerful force to expand freedom of expression and the flow of information, stimulate innovation, and promote the economic interests of consumer and creative artists alike (see Exhibit EX-1).

This report explains why public policy should embrace peer-to-peer technologies. It examines the history of technological innovation in communications and the "piracy panics" they cause among entrenched incumbents. For three centuries, in battles over the printing press, telegraphy, mechanical pianos, cinematography, radio, cable television, photocopying, video and audio recorders, and the current generation of digital technologies, public policy has favored technological innovation by refusing to allow copyright to regulate technology. The paper reminds policymakers of the historic lesson that technological innovation promotes political, cultural, and social development, and economic growth. The analysis demonstrates the social and economic harms of the "tyranny of copyright" that recording companies and movie studios seek to impose on peer-to-peer technologies, as well as the legal and public policy grounds for rejecting this tyranny.

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Monty Solomon
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