How the Supreme Court may have already saved Napster

By Richard Menta - 7/31/01

An extremely interesting article by Anupam Chander of illuminates a concept of law called eminent domain and how a recent Supreme Court decision could use it to bring back Napster in its original form. It's a must read for anyone who has any interest in how we will access digital music in the future.

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The logic is as follows. Last month, the Supreme Court ruled in a case New York Times v. Tasini for freelancers whose pre-Net works were entered into electronic databases and made available online without their permission and without any compensation. The court ruled that when Tasini authorized his work to be published in the paper this right did not include the right to republish his work in electronic form. That right still stayed with him.

Somewhat. The court also realized that the manpower needed for the Times to secure the permissions from thousands of freelancers over hundreds of thousands of legacy articles would be daunting if not impractical. Furthermore, as a complete entity, that database online provides a useful and important service for that benefits the general public. When something benefits the general public, the law can give it extra consideration. Chander writes:

Rather, the Court suggested that the trial court could fashion a creative solution that ensured that Tasini's articles, and those of other freelancers, would still be available to the public in electronic databases. The Court noted that the goals of copyright law are "not always best served by automatically granting injunctive relief." Thus, just because Tasini owns his articles, that does not mean that he can force the New York Times to remove them from its databases. The Court even implied that the trial court could compel Tasini and other freelancers to allow the Times to license their work for publication in electronic databases-as long as they were compensated.

As Chander later pointed out, the court feared that "holes in history" could be created if important works could be removed from these electronic databases. Since the goal here is the good of the general public, the courts and legislators have a duty to insure this intellectual property be made available to the public and can coerce a contractual agreement. This could be accomplished by mutual negotiations or, if that should fail, compulsory licensing. As Chander continues:

Under the doctrine of eminent domain, the government may declare a piece of land necessary for public use and then simply take the land - as long as it pays the landlord a reasonable price. (If a reasonable price is not paid, a Takings Clause suit will result.) Compulsory licensing is the eminent domain of intellectual property. It, too, allows the state to interfere with an individual's property as long as compensation is paid, and mandates that the amount of compensation be determined objectively, not subjectively. That is, even if the owner wants a higher license fee, he or she must settle for the fee an arbitrator considers reasonable.

What does this have to do with Napster?

Like the NY Times online, Napster is an electronic database. It contains copyrighted material it did not pay for and also has been sued to remove said material. Unlike the Times, Napster was shut down by the lower courts and told it MUST get permissions from every single copyright holder.

Napster was sued by individual artists (Metallica who are to Napster what Tasini was to the Times), the record companies, the music publishers and the songwriters. What makes things even more difficult is some of these groups are claiming ownership of the same rights, a product of aged music copyright laws that are more convoluted than that of the written word because of the group nature of creating each single product. A single song may require permissions from several parties and all of them must agree to participate for that song to appear.

As Chander points out, this ruling essentially put all the cards in the hands of the record companies who established the bulk of these rights and have little interest in licensing their works to Napster. They have ultimate control and through their lobby the Recording Industry Association of America (RIAA) monopoly power.

Compulsory licenses avoid the abuses of monopoly power according to Chander. Napster will now go into district court, using the Supreme Court's ruling to claim its database serves the public good by providing easy access to a wide variety of material.

Music, like the written word, is part of our times and culture. They represent the mood of an era just as equally as a news commentary on a historical event. If thoughts on World War two can invoke a sound track of Big Band era music, then Napster's claim that it serves the general public is both plausible and viable. Napster can therefore force the court to grant compulsory licensing, licensing that will allow users to trade ALL music available as they did before Judge Patel's ruling a few months back.

This also means that Napster will have to pay for all the files traded and that means the user will have to pay for Napster. Napster is already converting to a subscription service, but with restrictions that put serious doubt on it becoming a viable pay service. Compulsory licensing removes those restrictions.

With compulsory licensing the songwriters get paid, the music publishers get paid and the record companies get paid. The artists won't get paid unless they prevent the record companies from collecting their check in their name. Call it creative accounting, a subject that has been covered by hundreds of news articles since the Napster debate began, but also goes beyond the sphere of Napster.

Napster Alternatives

That still leaves the Napster clones, free services that have grown exponentially since Napster's shutdown a month ago. What will this mean for them?

First of all, compulsory licensing puts less pressure on these clones to flee the country and turn an American industry into an import (not meaning to sound jingoistic, but there are more than a few dot com workers from dead Net music sites alone put out of a job).

Second, many of the clones were set up not with altruistic intentions, but to create a profitable business. Audiogalaxy Satellite is the first alternative service that comes to mind as willing to jump at compulsory licensing. The same may go for Music City and iMesh. Gnutella, on the other hand, is the grass roots effort among the alternatives and will probably remain free and elusive.

The Tasini case gives the court a creative remedy to a problem that otherwise is expected to dog the courts for years. It may not be a perfect remedy, but it will allow the original Napster experience to return to Napster. That is exactly what Napster needs to reclaim its lost audience, even if it will be for a fee this time.

As for the record industry, it may be the best thing for them too. They own Napster now and have managed to squander Napster's huge audience, literally giving it to the very clones they want to stop (see Napster Clones Crush Napster. Take 6 out of the Top 10 Downloads on CNet). The record industry has been its own worst enemy up to now.

Yet, it will fight bitterly against compulsory licensing because they don't think it will make them enough money or give them enough power. One fact we do know. If Napster dies by their hand, the record industry will lose power. They have lost much of it already contrary to what they think. But then they think the MusicNet and PressPlay services they plan to unveil this fall will draw millions of users with fists of money in their hands.

The movie industry complained about the VCR and video rentals a couple of decades back for the same reason, power and control. Their loss in court made them millions as video tapes opened up a whole new front of revenue. They were rewarded for losing in court. The same probably applies to the record industry right now.

You can read Chander's article THE NEW YORK TIMES AND NAPSTER: How The Supreme Court's Ruling In Favor Of Freelance Writers here.


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