Europe Passes 'Napster' Law.

By Richard Menta- 2/14/01

"What Napster offers goes beyond the private sphere," said Italian socialist Enrico Bosselli, the man who wrote the European Union's Napster law. "In the EU we are not envisaging that it will be legal to buy music in a shop, then put it on the internet without users paying for it."

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With those words, the European Parliament swept in legislation a law that will ban peer-2-peer software that allows the trading of copyright material without compensation to the artists.

The law, coming days after a US court ruling that paves the way to shut down Napster in the states, is meant to do the same for Napster among EU member countries. This the second of a double victory for the music industry, which has lobbied hard to the legislative bodies in both continents to kill P-2-P trading.

Still, not all sides are completely happy with the bill. Initially offering compensation to the artists sounds fair but what the law does not state is what that compensation is to be. That has to be negotiated among the parties and in the states it has not gone well so far.

Fueled by laws in the US that stated Internet radio stations must pay royalties (unlike their traditional counterparts who send their music over the airwaves), the music industry demanded egregious fees starting at 15% of the annual gross of a web companies revenues. Web entities, already struggling financially, walked away from the bargaining table choosing to fight for repeal of the legislation, a process that will shutdown negotiations for some time.

The EU law actually sidesteps that dilemma by declaring that no copyright fees would be assessed for "streaming" content, a process where audio and video content is transmitted but not saved. The recording industry was not happy with that part of the decision, especially since it should work in Web radio's favor here in the states.

Another problem is that unlike the book industry, in the music industry the artist is frequently NOT the copyright owner's of their music, the company who puts out their records are. Because of the structure of some contracts, many artists will never see a dime of this compensation for digital rights that didn't even exist when they signed those contracts (see 'Court Rules Musicians Do Not Own the Digital Rights to Their Songs').

There are some good compromises that have come out of the law. The best one protects museums, libraries, and the education system who will be allowed to copy material for public use free of charge. "Copyright should be protected, but the right to study and do research should also be protected if it is not for commercial purposes," said Bosselli.

The law now goes to the governments of 15 EU members who are expected to approve the draft in a matter of weeks. The bill leaves it to each government to decide how to implement the law. Some countries like Germany have already endorsed fees on blank CDs and other recording media to cover payments to artists. Hard drives are seen as the next media receive such tariffs.

Ironically, fees on recordable media could actually be used to save Napster and its ilk. That is because once mass fees are assessed across the board, files traded on Napster can be considered already paid for. Remember, the goal of the law is to ban peer-2-peer software that allows the trading of copyright material WITHOUT compensation to the artists.

That is why the music industry, while happy overall with the law, felt it did not go far enough. If recording media fees are assessed universally across the European Union and if Napster fairs poorly in the US courts, we could see Bertelsmann move Napster to its native Germany where the law may actually protect it. With it will move US jobs and future revenues.

Since worldwide access is easily achieved on the Net from anywhere on the globe, what has started out as an American industry may move overseas. That would be a big loss to the US.

This is not a problem with the major labels. That's because four of the big five music conglomerates are foreign-owned and run entities. International trade folks, a new element to the game.

Copyright MP3 Newswire 2001

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