Why the Record Industry Doesn't Stand a Chance

Newhouse News Service ^ | Aug. 19, 2003 | JAMES LILEKS

[new cruelty]

Forget Napster. The newest place to steal -- sorry, "share" -- copyrighted materials is Earthstation 5. They claim 22 million downloads of their software, offer digital copies of movies still in the theaters, and boast that no one will be able to shut them down. They may have a point.

They're located in the Jenin refugee camp on the West Bank.

You can imagine the discussions in the Recording Industry Association of America's legal office: "You serve them with papers." "No, YOU serve them." (Pause) "OK, we'll send an intern."

Earthstation illustrates the problem the record industry faces: It's a big planet, it's wired together, and it's filled to the gunwales with pirates.

You've heard of Napster? So 2001. Now there's Kazaa. Now there's Grokster, whose corporate location in the West Indies just screams, "Come and get me, copper!" There's Blubster, another music-swapping program provided by a company in Spain. The day there are two servers in Greenland, the second will be devoted to letting 20-somethings in a Vilnius dorm room download Metallica songs.

The recording industry hasn't just lost control of its product; the product itself has lost its reason for being. The CD is as dead as the album, and for the same reason: Most bands have one or two good songs, a couple of so-so numbers and a half-dozen tracks of dreck you'll never hear again. We all know what CDs cost -- you can get a hundred blanks for a sawbuck. So why does the disc cost almost 20 bucks? Well, there's the cover art, the distribution, the advance to the artist, the cost of catering a five-week recording session for a band made up of ultra-vegans who eat only imported Irish loam, and of course the all-important $19.99 PROFIT.

You can't begrudge them a profit, of course. It would be nice if it trickled down to the average recording artist as well, but let's not be silly dreamers here. What really plagues the industry is an antiquated business model that requires putting out 10 tons of overpriced junk in the hopes that 3 ounces will make 11 tons of money.

But no one wants albums anymore. They want songs.

Unfortunately, they want them for free, and that's where the RIAA steps in -- with hobnailed boots. They've threatened file-sharers with huge fines for each download, meaning that kids with 30 gigs of "shared" music could face fines equal to the gross domestic product of sub-Saharan Africa.

The downloaders insist they have the moral high ground; they'll complain about the cost of the product, the unjust contracts musicians sign, the shoddy treatment the industry gave Blind Willie Simon in 1937, etc. They'll sniff that the musicians should give away the product and make their money touring, which is akin to saying restaurants should give away food and make their money selling souvenir forks. They'll craft shaky analogies to libraries -- as if the public library lets you take a book, make a perfect copy, and give it away to 4,982 people.

It's all a justification for the Internet's eternal problem: No one wants to pay for anything unless that something is nekkid women. And even then they'll complain about the price.

So what's the solution? Congressional hearings, of course. That'll fix everything! The creepily named Senate Government Affairs' Permanent Subcommittee on Investigations will soon hold hearings on the RIAA's dilemma.

But get this: The subcommittee's chairman thinks the RIAA is being "excessive." And he's a Republican -- Sen. Norm Coleman, a Minnesota solon who admits to having used Napster himself.

Coleman has a point; copyright laws permit fines up to $150K per tune. There's no sense in suing some kid eleventy million bucks for file-swapping songs. On the other hand, no one is going to stop stealing music unless he's scared of being arrested, sent to jail and forced to share a cell with a smelly old hippie who sings Mungo Jerry songs all night.

But there will never be enough arrests or convictions to stop the hard-core downloaders; there will never be a technological fix that someone won't find a way around. Copyright violations will cease when enough people decide they're morally wrong, when the old explanation -- "But Ma, even senators do it!" -- doesn't feel right. When the Internet is governed by reason, decency and conscience.

Never, in other words. See you in Jenin.

[Extremely Extreme Extremist]

BUMP for a later read.

[Snuffington]

my point is the commandment about theft.

That's where I think a lot of the confusion on both sides of the issue come from. Generally theft is understood to be taking something not belonging to you, thereby depriving the rightful owner of it. But in the age of "intellectual property" that's been expanded, and not always in very sensible ways. With the recordings in question, the "theft" is actually the creation of a duplicate copy. The thing being allegedly "stolen" is the potential customer, or more precisely, the money he might have spent purchasing the song through some legal medium. That's a lot more difficult to popularize as theft, and it's one of the reasons moral outrage against thievery isn't making a dent in song sharing.

The urge to protect intellectual property is understandable - it encourages the producers by providing opportunities for profit. But there are powerful free-market reasons to discourage intellectual property also - after all, where would American industry be if Henry Ford was the only one allowed to use an assembly line?

Obviously, our current laws haven't attempted to drive home some sort of pure philisophical point on the issue. They have attempted to establish a reasonable and enforcable balance. But that sort of balancing act has to adapt to fit the situation.

With the current situation of the recording industry, it is simply no longer reasonable to try to prevent song sharing. The technology to record and distribute, once expensive and specialized, has become extremely cheap and nearly universal. Just as it would be ridiculous to prevent someone from hearing a tune and singing it later in the shower, it's growing ridiculous to try to stop someone who has a digital copy from making another and sharing it. While the RIAA might benefit from an intense and expensive governmental enforcement initiative, society overall would be more hurt than helped. It's time to redraw the line in a more reasonable manner.

[xzins]

So, because they had to get known first, that means that stealing their music without paying is AOK?

I don't think so.

[dennisw]

I'm on a compliment rip today

[xzins]

Modern technology has made the lines blurry.

However, I know what my intent is when I download someone else's work.

My intent tells it all. My justifications might make me sound innocent.

[discostu]

Toby Kieth is the country guy with all the EXTREMELY patriotic songs like "Courtesy Of The Red, White, And Blue" who's become very popular in the post 9-11 world. Good guy, he was this way before 9-11 it's not just some pose.

I have a rather perverse CD collection. Very eclectic tastes. I've described my life as the desperate fear I might die without hearing every song I'd like (which, with my tastes, is actually a statistical certainty). I never listen to the radio either, I consider radio to be like communism for music, some centralized chump making bad decisions for me. That being said the timing of hits with cultural events does provide a lot of context for recent history and that's entirely because of the centralized distribution system.

Clear Channel is pretty close to a monopoly. Within talk radio they aren't so bad, but within music radio they're terrible, very vanilla. They use cookie cutter concepts and don't like their channels to take listeners from each other pushing to get all their channels within a genre roughly the same number of listeners. As bad as music radio was before Clear Channel makes many whistful for that time.

[Revolting cat!]

You seem to have accepted someone else's (RIAA's in this case) definition of what constitutes theft. It's hard to argue with the authority of an established institution and choir of the media parroting the party line. But as someone argued above (and you failed to address) characterizing sharing as "theft" is dubious. Some of us live by a commandment to think for ourselves and make up our own minds. Sharing musical recordings is no more theft than listening to a song playing on a jukebox that a stranger fed with his coins!

[Ronaldus Magnus]

We kill the music industry, and we wipe out a HUGE contributor to the socialist democrats in this country. We also wipe out a huge negative influence on popular culture. We minimize people like Madonna, Sheryl crow, etc by wiping out the music industry. After that is accomplished we can wipe the floor with the movie industry. This would be a good thing for the same reasons. The left continues its stranglehold on the popular culture because of the media. So we either control the media or we decimate it, and thus defund the socialists.

Brilliant point! This "industry" is in fact an enemy of our democracy and our culture.

[MoJo2001]

Newsgroup usage is growing. The one complication with newsgroups is the ability to put material together. That's not so much the case for music or music videos, but if you want to play some of the stuff you have to have codecs. (Not that you can't find them in the binary groups themselves. This isn't just a problem with the recording industry. Why don't they ask the gaming community about the download problems.

[George W. Bush]

FR has taken their case to court and been upheld according to fair use of copywritten material....political discussion. And no one could say that it isn't political discussion.

So then those copyright notices don't mean anything if only people take the work, reprint it elsewhere (where the online ads won't be included) and then discuss it?When not even one copy of the original was paid for?

Discussing a copyrighted work eliminates the copyright?

I think you don't understand the real case and just what was settled. FR is by no means in compliance with copyright law. It's just that no one is as yet interested in pursuing it legally. This has more to do with legal tactics than with anything else.

You are arguing, for instance, that discussing syndicated columns makes copying them legal. You are arguing that posting Associated Press syndicated articles is legal without paying them the way their customers (newspapers) do.

How many people at FR don't even bother to buy their local papers because they can turn to FR to get it? And without any popup ads or cookies or extra download time for ads and such? You think that they don't lose money because of FR?

I suspect you know how flimsy your argument is.

And you didn't tell me if you have ever photocopied or recorded copyrighted materials. I've been looking for that one sinless-before-copyright-law paragon of virtue for years now.

Are you then the fabled copyright virgin I have hitherto sought in vain, pray tell?

[dennisw]

Refugee P2P outpost escapes authority

By John Borland
CNET News.com
August 14, 2003, 4:00 AM PT

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Deep in the tense Jenin refugee camp in the Palestinian West Bank, a new file-swapping service is daring record labels and movie studios to turn their piracy-hunting into an international incident.
Dubbed Earthstation 5, the new file-swapping network is openly flouting international copyright norms at a time when many older peer-to-peer companies are trying to establish themselves as legitimate technology companies. One of the brashest of a new generation of file-trading networks, it is serving as a new test case for the ability of high-tech security measures and international borders to preserve privacy on the Net.





As the deadline looms this month for what will likely be thousands of copyright lawsuits filed by the Recording Industry Association of America (RIAA) against individual computer users, anxious file swappers are turning to this and other new services in hopes of avoiding legal consequences. In EarthStation 5's case, it is returning industry legal threats with bravado.

"We're in Palestine, in a refugee camp," said Ras Kabir, the service's co-founder. "There aren't too many process servers that are going to be coming into the Jenin refugee camp. We'll welcome them if they do."

On its face, Earthstation 5 appears to be at the leading edge of the movie and music industry's next nightmare--copyright-flouting networks based in a territory without strong intellectual property laws, with security built in that protects users from scrutiny. Indeed, the company is confident enough in its territorial immunity that it even streams and offers downloads of full albums and first-run movies like "Terminator 3" and "Tomb Raider" directly from its own servers, an activity that has previously resulted in lawsuits and the prompt disappearance of predecessors.

As an unabashed advocate of unrestricted file swapping, the company may also serve to undermine recent conciliatory efforts of older peer-to-peer companies. Companies such as Kazaa parent Sharman Networks have tried to open negotiations with the recording and film industries in hopes of ultimately reaching a legal compromise. Several groups of peer-to-peer companies have opened trade associations and lobbying branches in Washington, D.C., aiming to show they are legitimate parts of the technology economy.

Like others in a new generation of file-sharing networks such as Blubster and Filetopia, Earthstation 5 bills itself primarily as an anonymous service. That's helped all of them draw computer users anxious to escape the high-profile recording industry campaign to find, identify and ultimately sue thousands of individuals trading music on networks such as Kazaa and Morpheus.

Trouble is, the claims to anonymity are as highly controversial as the services themselves.

"We have yet to see a P2P network where we have not been able to target individuals who are infringers," said Matt Oppenheim, senior vice president of the RIAA. "This is marketing hype of the worst kind. It is playing on the fears of others, encouraging them to engage in behavior that will get them into a boatload of trouble."

Out of the West Bank
According to Earthstation 5 founder Kabir, the company was formed after a conversation with his brother Nasser in Ramallah two years ago, as Napster was circling toward its nadir. Over time, they won the financial backing of investors in Israel, Saudi Arabia and Russia, who have asked to remain anonymous. Those funds were used in part to pay contract programmers, largely in Russia, to help build the basic software.

The 35-year-old Kabir, who speaks fluent English, says he is Palestinian but spent much of his childhood in Manchester, England, with his mother. He now has homes in Jenin and elsewhere in Palestine, where Earthstation 5 is based, he said.

He's not worried about legal attacks from the RIAA or the Motion Picture Association (MPA), groups that have successfully shut down many of the most blatant copyright violators online, he said. In the West Bank and Gaza, the Israeli government has ceded civil law enforcement to the Palestinian Authority. That body has propagated copyright rules that protect Palestinian copyrights but don't have strong protections for foreign works, he said.

He's now making sweeping claims for the success of the service: that it has been translated into more than a dozen languages, ranging from Turkish to Chinese, which has helped it be downloaded more than 22 million times--a number that would put it on track to rival the reach of file-swapping giant Kazaa.

Like much else in the gray areas of Internet file swapping, much of this is hard to confirm in detail. Nor are claims always genuine in this industry. In April, a Netherlands-based company that calls itself "The Honest Thief," which similarly advertised file sharing beyond the reach of American law, turned out to be a hoax.

Internet addresses Earthstation 5 uses point to Israeli hosting company SpeedNet, which did not return requests for comment. The file-swapping company's domain name itself is registered to an address in "Jenin refugee Camp #23," although that does not prove its actual location there.

The company's Web site gives an address in Gaza, as does the contact information for another Net address used by the service.

According to Download.com, a popular software aggregation site News.com publisher CNET Networks operates, the English version of Earthstation 5 has been downloaded just 25,500 times, with far fewer instances of other languages. Kabir said most of his downloads come from other sites or from the company's own site.

The software itself does not include a way to verify the number of people online at any given time.

Is secure really secure?
If the story of a refugee camp-based network that's flying in the face of international copyright norms is compelling, it is ultimately the strength of the technology itself that will determine the success of the service or of any of its new generation of rivals.

By comparison to more established services, Earthstation 5 is difficult to use and buggy. It claims to use a series of different technologies--most of which are similar to nascent efforts by rivals--in order to keep its users' identities safe.

First, it uses a different Web protocol, called UDP (for User Datagram Protocol), to transmit much of its information. This is harder to detect and track to a single computer than is TCP (Transmission Control Protocol), which is used by most file-swapping services and Web functions.

The company adds SSL (Secure Sockets Layer) encryption--the same technology that prevents hackers from seeing password or credit card numbers being sent to e-commerce sites--to protect data in transit. And finally, it encourages users to search and even transfer files through proxy servers, the electronic equivalent of using a middleman to exchange goods. That way, anybody who tries to download files will see only the Net address of the proxy server doing the relaying, not the person originally sharing files, according to the company.

None of these methods is a perfect guarantor of anonymity. Nor does the company provide enough real detail on its security to satisfy others in the privacy business.

"If I'm going to lay my anonymity on the line, I would want to see all the details about how a system works," said Ian Clarke, founder of Freenet, a yearslong project dedicated to producing a genuinely anonymous file-swapping and Net publishing system. "This is an issue we think about a lot. When we have people in China who could go to jail or worse for using Freenet, we want to make sure that we're not exaggerating those claims and what level (of anonymity) they afford."

Companies dedicated to scouring file-swapping networks for infringements say proxy servers could help people be temporarily anonymous, but they have flaws as well. A server could, for example, be a "honey pot," a trap set up by a group like the RIAA or MPA that will in fact do nothing to preserve privacy.

Kabir said his company runs several of its own proxy servers and encourages people to swap files through these. But if the service becomes extremely popular, with hundreds of gigabytes going through the service every day, running anonymous proxies would likely become prohibitively expensive and impractical.

"Right now, the proxy features in just about every P2P client don't work well. They end up slowing downloads and aren't highly utilized," said Travis Hill, director of engineering for BayTSP, a company that works for record companies and movie studios to find copyright infringements online. "But if and when they do start being used effectively--if proxy operators are allowing their machines to distribute copyrighted material--copyright owners will start notifying them and pursuing them also."

The U.S. copyright community has previously shown some restraint in dealing with infringing issues in the Middle East. File-swapping firm iMesh, based in Israel, is one of the oldest and most popular of the post-Napster networks and has thus far escaped lawsuits altogether.

Even if the RIAA and MPA can't go to Israel or the Palestinian territories to have the company's servers shut down, they do have options inside the United States. They've previously filed lawsuits against major U.S. backbone Internet service providers to block access to Web addresses that offer copyrighted material online and have said they are willing to do so again.

For now, Kabir and his brother are worrying just as much about maintaining a functioning technology operation in an area where suicide bombings and military reprisals are still a way of life. The company has talked to militant Palestinians as well as Israelis and has gotten the go-ahead to operate without being drawn into the ongoing conflict as much as possible, he says.

"We have met with the organizations on our side, met with the leadership, and we said we just want to support ourselves and support Palestinians," Kabir said. "Everyone thought we were nuts. But we all came to agreement. We're entitled to eat, too."

[dennisw]

Palestinians threaten RIAA & MPAA with war.
p2pnet.net, Canada - 8 hours ago
JENIN, West Bank, Aug. 19 /PRNewswire/ -- In response to the email received. FREE,
this is our official response! Earthstation 5 is at war with the Motion. ...
 

Earth Station 5 Declares War Against The Motion Picture ...
PRNewswire (press release) - Aug 19, 2003
FREE Music, FREE Movies, FREE Software and Now FREE Sex Being Beamed
By Earthstation 5 to the Humans for Free JENIN, West Bank, Aug. ...
 

Earth Station 5 Declares War Against The Motion Picture ...
Yahoo News (press release) - Aug 19, 2003
JENIN, West Bank, Aug. 19 /PRNewswire/ -- In response to the email received today
from the Motion Picture Association of America (MPAA) to Earthstation 5 for ...
 

Why the Record Industry Doesn't Stand a Chance
Newhouse News Service (NNS) - 4 hours ago
... The newest place to steal -- sorry, "share" -- copyrighted materials is Earthstation
5. They claim 22 ... They're located in the Jenin refugee camp on the West Bank ...
 

Palestinian P2P Earthstation 5 founders try their luck
Dslreports - Aug 15, 2003
"There aren't too many process servers that are going to be coming into the Jenin
(Palestine) refugee camp, says Ras Kabir, co-founder of p2p app Earthstation5 ...
 

P2P in the West Bank
Geek.com - Aug 18, 2003
From the town of Jenin on the West Bank, a P2P company touts a secure forum for file-swappers
to trade their wares online. Earthstation 5, which was started by ...
 

P2P seeks refuge on West Bank
ZDNet.co.uk, UK - Aug 14, 2003
... Manchester, England, with his mother. He now has homes in Jenin and
elsewhere in Palestine, where Earthstation 5 is based, he said. ...
 

File-sharing takes off in West Bank refugee camp
Silicon.com - Aug 14, 2003
... childhood in Manchester with his mother. He now has homes in Jenin and
elsewhere in Palestine, where Earthstation 5 is based, he said. ...
 

File-sharing from a Palestinian refugee camp
Internet Magazine, UK - Aug 15, 2003
... There aren't too many process servers that are going to be coming into the Jenin
refugee camp. We'll welcome them if they do.". Earthstation 5 claims to "break ...
 

RIAA to face a tricky challenge?
Neowin, Netherlands - Aug 14, 2003
... There aren't too many process servers that are going to be coming into the Jenin
refugee camp. We'll welcome them if they do.". On its face, Earthstation 5 ...
 

Earth Station 5 Declares WAR Against the Sex Industry
PRNewswire (press release) - Jul 28, 2003
FREE Music, FREE Movies, FREE Software and Now FREE Sex Being Beamed By Earthstation
5 to the Humans for Free JENIN, West Bank, July 28 /PRNewswire ...
 

Earth Station 5 Declares WAR Against the Sex Industry
Yahoo News (press release) - Jul 28, 2003
JENIN, West Bank, July 28 /PRNewswire/ -- Earthstation 5 today declares
war against the sex industry for all the sex located on the internet. ...
 

[wideawake]

So that makes it ok to take their music without paying?

In point of fact I've never downloaded mp3s of music that weren't first offered to me by the artist.

But I still think that a recording is not intellectual property. Writing a song is one thing. Performing a song is another. If you sell me a recording of a song, I am free to do whatever I wish with my property.

I am uncomfortable with the notion that if my sister borrows one of the mix CDs I've burned from my (storebought) CD collection to listen to, she or I have committed a crime.

And that happened just last week when I loaned her my car for the afternoon.

[discostu]

Copyright for things that are considered to be news related is a lot looser than for anything else. The CW being that news itself can't be copyrighted therefore copyright of one "presentation" of the news is weakened dramatically. Because you can take the pertitent facts which aren't copyrightable (here, they are in England under certain circumstances) and write your own story distribution isn't as strictly controlled.

[Revolting cat!]

And that happened just last week when I loaned her my car for the afternoon.

Uh, oh! You'd better hope the automobile industry doesn't learn about this act of thievery!

[Orangedog]

my point is the commandment about theft.

But you're hanging out at FR.

Okay, that takes us from theft to sloth ;)

[RWG]

I wish I could record a days work and then sell it over and over again whenever someone needs a job done.

Every time you go home you should pay the carpenter.

[Snuffington]

Modern technology has made the lines blurry. However, I know what my intent is when I download someone else's work. My intent tells it all. My justifications might make me sound innocent.

My point is that intellectual property is not the same concept as physical property. We have tried to create some of the same rules about them, but they don't always apply, and we need to be reasonable about enforcing them.

Take the published music industry as an example. Would they like to be paid every time someone sings one of their tunes in the shower? Especially when there's an "audience" able to hear in other parts of the house? Sure. But it's not reasonable, and certainly not enforcable. However, have someone sing the same tune in the shower in a movie or television show, and they demand (and receive) payment. Both examples are people "sharing" the same piece of intellectual property. But they are not handled the same, even though the music industry characterizes the basic activity as "theft" if it isn't paid.

Incidentally, the difference in the example above is only the distribution medium. Everyone has a voice and ears. Trying to regulate personal singing and listening is futile. But regulating a few specialized mass broadcasters is still somewhat reasonable. In an age when everyone has access to a computer digital recording and distributing has changed from being specialized, like mass broadcasters, to universal, like voices and ears.

I would be the last one to advise you to violate your conscience on downloading music. But as a matter of law and public policy, we need a reasonable restructuring in this area.

[3Lean]

Music companies and musicians (some of them, anyway) have been extracting monopoly profits due to an artifical barrier to entry (copywriting) and natural barrier (you only have so many friends to borrow that CD from).
The internet has removed both of these barriers - end result - lower profits for the music industry, fewer musicians who can make an outrageous amount of money for their level of talent, a move to use recorded music to promote concerts (which can still be used to generate profits).

[George W. Bush]

That being said the timing of hits with cultural events does provide a lot of context for recent history and that's entirely because of the centralized distribution system.

Ah, I learned to avoid this context you mention after the Seventies. My life is my own and needs no contextual musical demarcations via Muzak.

I'm a little stiff-necked about this. But then, once you attain a certain level of playing, you can afford to be. What a pity that more people don't realize that all the time they spend grooving on the music of others is less than that to actually learn a decent instrument for themselves. But then, we are the consumer-is-king couch-potato culture, aren't we? What a shame people have so little interest in themselves and producing something of value and durable entertainment for themselves. There's such a vast array of potential talent that goes to waste because the canned, studio-produced, over-processed commercial product is their conception of music. And it's such a narrow and limited form of spectator participation.

When you play a great piece by one of the great composers (pick one, classical/jazz/etc.) that composer and his work live again. In you. He is just as alive in that moment as he ever was. His music still makes its points. It is a physical thing, something that almost captures you, your hands become a flesh to recite that musical prose. It's so different from almost anything else you can do.

When you play an instrument, particularly classical, you become a co-creator of the repetoire. It exists because of you, your love for it, your desire to keep it alive for your own private joy and, incidentally, for others to hear if they wish. But others aren't the point. It's the love of the music and the instrument that keeps you going.

How sad to instead go buy a piece of plastic and sit in front of an electronic sound reproduction system to listen to a never-varying piece of music that is so over-processed with DSP chips that it is utterly impossible to ever perform as a live piece. What a lie that whole studio-based system really is, like the false front of a cheesy carnival that hides the reality behind it.

Let it die. Let real music of all varieties come back.