Transcript of the debate

Tracy Mitrano:

Good afternoon, everyone, and thank you so much for coming today to the Office of Information Technologies' University Computer Policy and Law program, in which we are going to have a debate about file sharing. Allow me to briefly introduce our speakers today, our debaters. We have Matt Oppenheim from the Recording Industry Association of America; among other and many distinctions, Mr. Oppenheim is a graduate of Cornell Law School in 1993, so welcome back, we're very glad to have you here. Thank you. Over here on my right I have Robert Hamilton of Jones Day and he is also a charter member of what was the Computer Policy and Law Program and is now in a collaboration with EDUCAUSE as the EDUCAUSE/Cornell Institute for Computer Policy and Law, and we are also very, very delighted to have him here today to debate on the other side. Thank you, Bob, for coming.

We are going to begin the debate today with a simple question. We will follow up with a number of other, particular questions, and after not too long we will open up the floor for your questions.

Gentlemen, audience: Is file sharing a problem? And if it is, how do we correct it?

I'm going to allow each of our speakers five to ten minutes to talk on that general question before we move on into the debate. Why don't we begin with Matt Oppenheim.

Matthew Oppenheim:

[Moving to podium] I'll do this opening up here. This way I'll see things coming at me when I'm standing as opposed to sitting. [To a student who mimes throwing] Yeah, okay, I've got your number!

Good afternoon. Thank you for having me, Tracy. Let me start by just asking some general questions so we get a sense of who we have here and what everyone's starting point on this issue is. How many people here are students? We'll start with that. Undergraduate as opposed to graduate or law school? How many law students? Great. Professors and administrative folks? Great. For those of you who can't see, it seems as though my guess is it's about 75% students, a pretty good mix. How many of you have been on a file sharing... a pirate file sharing network? [Most people raise hands] How many of you don't want to raise your hands because you're concerned I might take names? Is there anybody here who has not been on either KaZaA, Napster, or any of those networks? [A few people raise hands] Ah. [Pointing to opponent's raised hand] I don't believe this one. [Audience laughs]

Let me give you a little background on where I come to this issue from. The Recording Industry Association of America represents record companies in this country that constitute about 90% of the music that's distributed legitimately in the United States. The record industry in the last three years has seen a staggering decline. In the last three years, we have lost over 31% of our market. Now some of you may think of that, well, in the dotcom era, people lost more than 31% in a lot shorter time than three years. But for an industry that was approximately 18 billion dollars in the United States annually to lose the percentage they've lost, after being in a stable industry for years, has had a profound impact. What that has resulted in is thousands of job losses in just my industry alone, tens of thousands of employees who have been laid off when you look beyond just the record companies themselves. It is everybody from the guy who is an upcoming A&R star to the businessman whose job it is to promote music to the fellow who works in the record store to the woman who drives the truck to deliver the music to the people who work in the CD manufacturing plants. We're talking about tens of thousands, if not hundreds of thousands, of jobs lost in the last three years. Given that intellectual property constitutes five percent of the gross domestic product of this country, we should be concerned. It is the single largest export the United States has, and it is something that we as a country should and must protect for our own economic interests.

Leave aside just the dollars and cents, it has an impact on the people who aren't associated with the industry. It's not only less tax dollars, it's less artists getting signed to labels because there's less money to sign those artists, and so that means there's less new music and there's a less diverse array of artists for people to hear and be exposed to from the record companies. It means there's less money for artists who want to put out albums that they wouldn't have otherwise put out. It is having an impact not just on business, but on the quality and quantity of music that record companies are putting out. They have had to slash artist rosters dramatically.

So, during this period, this three-year slide, what has happened to cause it? File sharing. In the same period that we've seen dramatic declines in the record industry business, we've seen an exponential growth of file sharing. There are now at any given time on the KaZaA network up to four million people on at one time, and there are upwards of eight hundred million files being distributed.

Now, many of you out there may be saying "Well, that's not all infringing, and so you shouldn't condemn the entire network." Well, let's consider what's on that network.

• In the case of Napster, which was a very similar file-sharing network, we did a statistical study that was adopted by the United States District Court and then subsequently by the United States Court of Appeals that was overseen by a Stanford (sorry) stats professor. And what that statistical study showed was that 87% of the content on the network was infringing. Now, don't jump to the conclusion that 13% is not infringing, because that wasn't the case. 13% were things like file headers that had nothing in it, or Vietnamese folk music for whom we couldn't find the owners of it in time to submit it to the court. But there was an extremely low rate of non-infringing content.
• In the case of KaZaA, we did a similar study and presented it to the United States District Court in Los Angeles, which was accepted, and showed that upwards of 90% of the content was infringing.
• And as for the users of Napster, of that statistically relevant sample of users on the network, 100% of them were infringing. Not a single individual who was part of that sample was engaged totally in non-infringing activities.

So we have growing file sharing; we know that that file sharing is overwhelmingly infringing; we have a declining record industry; and the final piece of this puzzle that makes us absolutely certain that there is a correlation are the polls and surveys we've done, where repeatedly we hear individuals say they are buying less music because they are downloading more music. It's irrefutable. Almost 60% of the individuals we polled last spring said that they're buying less because they're downloading more.

So, to answer the question "Is file sharing a problem?" Absolutely. It is having a huge economic impact, and it's absolutely correlated--the economic impact is absolutely correlated to the file sharing. So let me turn to a question Tracy did not ask, which I think needs to be asked, and that is, What are we, the Recording Industry Association, doing about it?

The first thing we're trying to do is shut the networks themselves down from sharing infringing content--not all content. In the case of Napster, everybody -- How many people out there think that we shut Napster down? ... It's a smaller number than I expected. Most people think we shut them down. We did not. What we asked the court for an order ... All we asked the court to do was to make Napster stop distributing the infringing content. Technologically, that can be done. In fact, it was being done. Most people didn't like Napster when it didn't have the infringing content because that's why they were going to it, but right before they shut down they had implemented a filter that could almost 100% effectively filter out infringing content. That is all we are asking the courts to do in existing cases against the likes of KaZaA, Rockster, Morpheus. Those lawsuits are currently ongoing. While we've won in cases such as Napster and Aimster, which is also a local product, we have not been as successful in the case of Grokster. Some of you may have heard that a district court out in Los Angeles had denied our motion for summary relief. We've appealed that, and that argument will take place we believe in January in the Ninth Circuit Court of Appeals. We believe absolutely that decision will be reversed. In fact recently the United States Registrar of Copyrights, who's with the Library of Congress, testified before the United States Judiciary Committee on this case, and in her testimony the honorable Mary Beth Peters indicated that it cannot be the case that a file-sharing network can be built with the intent of profiting off of other copyrights and be allowed to exist, and that if the decision in the United States Circuit Court in Los Angeles were allowed to stand, it would "eviscerate" the concept of secondary liability of copyright. Now that may not mean a lot to those of you who aren't in law school or lawyers here, but from a legal viewpoint that is a very substantial statement by somebody who is unbiased on the issue.

So, in addition to suing the networks who are trying to profit from this infringement, we are also...we've been involved in an education campaign. I don't know how many of you have seen ads that have been on BET, or have been on radio, or have seen instant messages that we have sent to individuals who have been infringing. We've been trying to get the message out that you should not infringe; it hurts artists, and it hurts the record industry; you can be caught, and there are consequences.

Third, we've been trying to get legitimate alternatives out there. Many would complain that we have been late to this party; many of you might be right. But they're out there now. Have any of you been on Apple iTunes? Do people generally like it, apart from the fact that you're paying? Or the new MusicMap service, where you can download for 99 cents as well. Or the Rhapsody service, or Listen, where I believe you can download for 69 cents. There are a whole host of legitimate services up there now. They have different business models, they deliver music in different formats; none of us know where these are going to end up. Are we going to have an all-you-can-eat model where you pay monthly, or are we going to have a model where you pay 99 cents per download... I don't think we know. Our companies are out there, we're licensing everybody, and we're saying, let the consumers decide what they want. And these legitimate alternatives we think are a much more compelling experience than the illegitimate alternatives.

One last point, before Tracy kicks me off here, because this is what I think many of you want to hear about. Last but not least, we're suing individuals. We do this with great, great reluctance. We have for years [interrupted by laughter] You laugh -- it is absolutely true. For years we have had the ability to do this. We have not done it. We have not done it because we have been hoping that education would work, we've been hoping that by shutting down the networks distributing infringing content it would work, we've been trying to do everything we can to avoid suing individuals. The problem is that the growth rate of these networks has increased, notwithstanding everything else we did, because when we told people what they told us is, "Sure, you tell us something's going to happen, but nobody's ever done anything." So we had to in fact do what everybody has always been worried about, and that is enforce our rights in filing suits. We do it with great reluctance, but we must do it and we are doing it. We intend to file a couple hundred suits at a minimum every month against substantial infringers. There are no networks that are safe; we have pursued people on every network that's out there, so long as they are infringing. And I'm sure we'll talk more about this, but it has been an important part of our campaign to try to get the message out because ultimately we want to drive people to get music online, but get it from legitimate alternatives.

[Discussion between Tracy Mitrano and Robert Hamilton about whether he will stand at podium]

Robert Hamilton:

I'll stay here. I may get less excited if I sit down.

Let me start off by saying that none of the points, statements, jokes I make here should be attributed to be the views of my clients, my law firm, my partners, my employees, my mother, my father, my sister, or my daughter, or truth be told they're really not even my views, so basically I'm a lawyer, I'm like a whore, whatever someone pays me to say I'll say. My job here is to debate him and so I will do my job, but do not infer anything about my personal views, because I don't have any unless I know who's paying.

Is there a problem? I think there's certainly, we could definitely say on a couple levels there's a problem. My ethics professor at law school, which is an oxymoron, Charles Nessen, I think articulated in a way that I cannot improve upon at least one nature of the problem, so I'll just share it with you. This was in an e-mail discussion that occurred about a month ago. Mr. Nessen writes,

"Yes, publishers have hidden behind the skirts of artists, shamelessly advancing the hapless artist and his impoverished grandchildren as excuse for extending copyright to inordinate lengths while giving the artist and his progeny somewhere close to zero as their cut of CD proceeds, maybe 60 cents out of a $17 CD. Yes, the labels have been screwing consumers to the max that corporate greed could figure. This is why, when Shawn Fanning birthed the current era of promiscuous copying, we all (at least many of us) felt a lift. Napster surged into our lives to demonstrate the impotence of a greedy industry and the helplessness of law. It was like a riot situation, in which the plate glass windows of the record stores were smashed, and all the inventory of the corporate gluttons was there for the taking. Plus, taking it was fun; the tech was slick, savvy, young, totally now. The labels were the enemy, or as I refer to them, the Evil Empire. Like the merchants in the ghettos gouging helpless consumers with outrageous prices for inferior goods, we smiled at their predicament, rooted for the kids, maybe even downloaded a song or two ourselves.

So, okay, the record industry needs overhaul. Change in the business model has got to be a predicate for re-establishment of order. Prices need to drop. Consumers want the ability to buy songs without having to buy whole albums. Artists want to reach the marketplace without having to sell their souls to the Big Five. Digital delivery of songs needs to come with rich inventory and wide flexibility.

But now it comes, five years later, iTunes and MusicMatch and songs for 99 cents or less, open to any artist with an indie label. At last the business model is changing. Is it time for the riot to end? Time to re-establish order with a reformed marketplace? Do you want iTunes and its PC variants to succeed? Or would you rather see the riot continue until desperation forces changes in the fundamental architecture of the net, or of the law? Is the idea to argue against any means of protecting the commercial value of an artist's work until the current system totally breaks?

I thought his analogies were very interesting. Now Howard Noth, a Canadian lawyer, responded in part to the riot analogy and suggested that

Mr. Nessen, your riot analogy to looting in the record stores is quite apt in many respects, it doesn't take into the fact that CDs are rivalrous goods and MP3 files are not. [I'm sure we'll be talking about that later today.] But whatever, the riot was useful in making the public and politicians aware of this difference, which is absolutely vital to the long-range sale of copyright policy. Calling a 12-year-old a pirate for "stealing" an MP3 file, or even a thousand MP3 files, is overreaching, and taking $2,000 from her mother by way of a settlement was shameful. The fact that the law might have required a judgement for more than a million bucks based upon minimum statutory damages if there had been a trial is astounding. Even if one had accepted that there were displaced sales of, say, 100 full-priced CDs (which was clearly not the case--the kid lived in subsidized housing), those displaced sales amounts would have been less than two grand. If the kid had stolen a new Ferrari and smashed it up, she would have walked as a juvenile. Something is very out of whack here. If there is a perceived riot going on, then I think at this point it is the RIAA that is "Fanning" it (sorry about that pun), shooting into the crowd, as it were, and hitting (maybe even deliberately?) little children with economic bullets. The current approach may completely backfire on the record companies and the artists. It is a cognitive and legislative dissonance nightmare.

Here we have a problem of a riot going on. As Matt articulated, there has been a huge economic impact on a huge and established industry file sharing. And clearly we have a problem going on with respect to the response of the industry and what they are now doing in suing individuals. The question is, what do we do? Should we continue to do this? How do we re-establish order?

In this respect, the final point I'll make in my introduction is just a brief trip back down to before what many of you may not remember, which is in the 70s and 80s.

In 1976 a lawsuit was filed by the copyright industry against Sony, a small little corporation over there in Japan, for manufacturing a machine called the Betamax, a video tape recorder, a VTR as it was called back then. I remember this because I was a junior in high school in 1976, and I remember that we had one of those early Betamax machines. The litigation proceeded for three years, and the copyright owners claimed that using a VTR, a Sony Betamax machine, to copy television programs over the air onto a videotape was stealing, pure and simple, theft of the copyrighted programming. It went to trial in 1979, and the district court, just like the district court in the Grokster case that Matt referred to, ruled that it was not theft pure and simple, that it was in fact fair use and was not illegal activity for individuals in the privacy of their homes to record copyrighted programming over the airwaves to watch it at a later time. That was in 1979 when the district court ruled; I was now a junior in college.

Two years later, in my first year of law school, 1981, the Ninth Circuit Court of Appeals, three judges, reversed the district court and ruled that using a VCR, a videotape recorder, to record television programs over the airwaves was theft. It was illegal. It was copyright infringement. And it didn't matter if you were building a library, so that you could watch all the episodes of Dallas or MASH or whatever you wanted to, or if it was just to time-shift so you could watch the baseball game and then once the baseball game was over, you could go back and watch that episode of MASH that night later on in the evening, what was called time-shifting.

That was the law in this country from 1981 to 1984. It was illegal to tape record television programming on your VTR. But millions did it anyway. We all did it. People made jokes about it. And yet the copyright industry was arguing Look, it's theft, it's law, the Ninth Circuit says it is.

In 1984, the U.S. Supreme Court reached a decision in which four of the U.S. Supreme Court justices agreed with the copyright owners' industry and agreed with the Ninth Circuit and said yes, using a videotape recorder to record television programming over the airwaves is theft, pure and simple, it's illegal. The problem is, five of the Justices said no, it's legal. They said it's fair use. They said look, you have to balance things. And we have to balance the economic interest of the copyright industry with the interest of society and individual users and how they want to use the product. In the U.S. Supreme Court, at least five justices decided in how they conducted their own balance that in that context, apparently what was immoral and illegal from 1981 to 1984, after 1984 was all of a sudden moral and legal. Now there are a lot of differences between file sharing today and the Internet technology, and the videotape that was at issue in Sony Betamax. There are a lot of differences, there's a lot of ways you can distinguish them. And certainly history has proven that the development of the videotape industry actually increased the coffers of the copyright owners. It remains to be seen whether or not it really hurt the networks or not, but certainly some aspects of the copyright industry made out like bandits because of this development. They didn't know it at the time, they were arguing against it, but it actually developed a whole huge home market for prerecorded tapes. But they didn't know it at the time, they were arguing it was theft, pure and simple, to have these machines that allowed you to copy stuff over the airwaves.

In the end, the legality of whether or not copying should be allowed, whether it should be considered legal, whether it's called fair use or whether alternatively it should be called piracy and theft, is not a moral or legal question. It all comes down to money. It is legal now to make tape recordings of your own CDs and your own albums on cassette tapes. It is hard to get a clear answer out of lawyers if you ask them, "Is it legal for me to make a tape recording of my friend's album?" Some copyright lawyers, including Matt, I think will tell you that's illegal, but we're not going to enforce it. Other lawyers will say well, that's probably fair use, that's probably legal, but we don't really know because no one's ever bothered to sue somebody for making a cassette tape of their friend's album. When I was in college, in frat houses and sorority houses, everybody's library of music was fair game for everybody else and we all made cassette tapes of everybody else's collection. In dorms and whatever, we all passed them around and shared them. Whether we were engaged in illegal behavior or not, who cares? The reality is, we all knew that we weren't doing anything immoral. Why is that? Because what we were doing didn't prevent the people that were creating and producing and distributing that content from getting paid. The reality is, and the Sony Betamax case is a perfect example of it, as long as there's a way to get the creators of the content paid, the act of copying and sharing it with others is not inherently immoral and shouldn't be illegal. And the problem we have here is, figuring out a way where file sharing can coexist with getting the creators of content paid. And in that context, I think, we're just at the beginning and we haven't quite figured out what all of the ramifications are going to be.

But I would point out, this may be a bad analogy, maybe not, that with the development of the horseless carriage, a lot of horse and carriage buggy manufacturers lost their jobs.

Tracy Mitrano:

Thank you very much. Why don't I give you, Matt, a three-minute rebuttal, upon which you [Bob] will have a three-minute reply, and then we will launch into questions.

Matthew Oppenheim:

Let me address three issues that Bob raised. One is the Sony case, the second is the Ferrari example, and finally the issue of whether or not file sharing is a legal or moral issue.

Bob, your history lesson omitted some important facts. The case about Sony was not about the play button. Nobody cared about the play button. They only cared about the record button. And the movie industry hasn't made money on the fact that there's a record button out there, they've made money on the fact that there's a play button out there. They never challenged the play button, and in fact, at the time that Sony came out with the VCR, Universal Studios, the plaintiff in that case, was already in negotiations with Panasonic to create a video laserdisk that had play functionality. So that was already in the works. It would have happened, in one format or another, regardless of whether or not there was a play [sic] button.

The second thing that he's left out is that the Supreme Court decision was much closer than he would let you think. The Supreme Court decision was only the second case I know of where after the litigants came and argued it to the Supreme Court, the Supreme Court threw up their hands and said, "We can't figure this out. We want you to re-brief it and come back and argue it again next year." So they come back the next year and then, you know, most of the time you have no idea what happens in the inner workings of the Supreme Court, it's this big mysterious box that cases go in and somehow shakes out and you get these decisions from these nine Justices, except that Justice Marshall's papers recently were published, and we went back and looked at Justice Marshall's papers on this case, and it's fascinating. It would have been a five to four decision in favor of Universal Studios except that Justice Black refused to accept one sentence that Justice O'Connor wanted to put in his opinion. So his decision went from being the majority opinion to being the minority opinion. A much closer decision than anybody ever thought, and my guess is I'm not the only person who will say this, a lot of people will say this, the Supreme Court will revisit that case, and revisit it soon.

Secondly, the Ferrari. When the kid busts up the Ferrari, while the kid may get off from being charged criminally, it doesn't mean that they're not responsible for paying or the parents aren't responsible for paying to replace the Ferrari. And I think as a lawyer you'll agree with that. And we're not, when we're filing suits, bringing criminal charges. We're pursuing civil cases. And so the Ferrari example simply doesn't work. If you're a kid, or you're an adult, it doesn't matter, you don't have a right just because you're a kid to bust up a Ferrari. You can't do it any more because you're 12 than if you're 25.

And finally, the issue of whether or not file sharing is moral or legal, the legality or morality of the issues. I would suggest that your statement simply doesn't work because it would be akin to saying bank robbery isn't really a legal or moral issue, it's simply an issue of money. Well, that's not true. Intuitively, we all think that stealing from banks is wrong, I assume. And those of us who don't think that are probably in the minority. What this is about was best summed up by LL Cool J. He appeared before a Senate committee a couple of weeks ago on this issue, and what he said was, "Senators, what I want to know is, do I have any less right as an artist to make fair pay for fair work?" If I built a table as a carpenter and I want to sell it, I should have the right to decide how much I sell it for, when I sell it, where I sell it. Right? I built it. If I want to say, "This table is only worth $1,000" (and that, I mean it may be a horrible table, probably if I built it it would be), but I have the crazy right to say "I'm only going to sell it for $1,000 and by the way, you have to climb up six floors to get it." Well, that's the idea of property rights. An artist who creates something and puts their sweat and effort into it should have the right to decide when they're going to sell something and how they're going to sell it, because they're putting their effort into it and it's their property. And if they choose to sell it to a record company, they should have that right. If they choose to give it away for free, they should have that right as well.

Tracy Mitrano:

A few minutes, Bob?

Robert Hamilton:

For this to work, you all have to be really honest with us here, all right? Close your eyes, and then just think and listen to what I have to say, and raise your hand if what I say is responsive, but this has got to be a scientifically accurate study here. Put aside legal questions, copyright questions, whether or not you're going to get shot in the back by a policeman's bullet. How many of you think walking into a Tower Records or to Camelot, pulling a CD out of the bin, sticking it under your coat and walking out and stealing it is morally wrong? Raise your hands. I would say 100%.

All right. Now you all close your eyes on this one before you raise your hand. How many of you think, when you tape record a show on your VCR off the television, you're doing something morally wrong? Zero! Oh--one, one. How many of you--close your eyes--think, when you download an MP3 off the net, you're doing something morally wrong? Maybe 10%?

Matthew Oppenheim:

Shall we go the distribution question?

Robert Hamilton:

I don't want to go the distribution question, this is my three minutes of rebuttal. All right. Why is that? Why is it that 100% think walking into Tower Records and stealing that CD is wrong, but all of us think tape recording a show off the air is morally ok, and 90% of us think it's okay to download a song off the net? Morally, putting aside the legal questions. Why is that?

Because it's not theft, pure and simple. Because it's not like robbing a bank. Historically, people do not think copying is wrong morally. We think it's good. The classic cliche is, ideas want to be free, but that's wrong. People want ideas to be free. The reason copyright has been able to survive and exist, the reason it can be protected, isn't because people think copying is morally wrong. It's because the technology to engage in copying was expensive, and therefore the only people who could engage in the copying wholesale were people who could get a return on their investment -- the pirates, who could sell what they copied, which I think we all agree is wrong. I think--how many of you would think that going out and downloading all these MP3s, putting them on cassette tapes, and then selling them to other people is morally wrong? It's the technology of copying that allows copying to exist in our society, not moral thoughts on whether or not copying is wrong or right. The problem is, the Internet and digital technology has changed the technology, and now copying is easy for everybody to do. But the underlying morality is, as this scientific example has just proven, it's not the same as robbing a bank, and the RIAA can get up here and say till they're blue in the face it's theft pure and simple, but the reality of the matter is that it isn't.

Tracy Mitrano:

Thank you very much. Why don't I follow up on that line of reasoning and begin by asking Matt: Is intellectual property, which of course copyright is considered intellectual property, the same thing as tangible property? You gave the example of the table, for example. Are they the same thing?

Matthew Oppenheim:

Unfortunately I raced out of my house too early this morning to do what I often do when I come to universities. What I often do is say, "Who here wants a disk? I'm from the record industry, I like to give away disks, who wants a disk?" Everybody'll raise their hand. And then I'll say "Okay, but I'm going to give you a choice," and I'll hold up two disks, and I'll have some new hot release, maybe this week it'd be Travis, and I'll have a blank CD-R. I'll say, "Which one do you want?" Invariably, every single time I've done this, the student always wants the new hot release. And the reason is, people don't care about the plastic, people want what's on it. That's what's valuable.

Tracy Mitrano:

Perhaps I'll ask you the same question, Bob.

Robert Hamilton:

There's no question that content, intellectual property, is valuable, it has value to people. There's no question about that. But there is a difference between physical property and intellectual property, not only in the law, but clearly in economics. The concept of rivalrous goods. If there's a CD in a bin someplace on sale for 20 bucks, and you go in, yank it and put it in your coat and walk out, no one else can sell that CD any more. They can't get 20 bucks from selling that CD because you took it. It's gone. They can't make a return on all the investment they put in in producing that CD. They have to go spend more money to produce another CD to sell for 20 bucks and get money from. If you make a copy of an MP3 off the net, you haven't cost the manufacturer of the CD or the song a cent. They didn't invest a cent in making your copy. The only adverse economic impact of you making that copy off the net is, now you don't need to go buy the CD, which is only an economic cost to the owner if you were going to buy the CD. If you weren't going to buy the CD, the fact that you made a copy to listen to, to see what it was like, didn't cost the owner anything. And that's the difference between intellectual property and a CD in the store. I point out another difference of more significance to a lot of people right now. You walk into a CD store, walk out with a $20 CD, you get sued and what are your damages? 20 bucks and a slap on the wrist from the cops. You engage in one infringement of an MP3 on the Internet, one copyright infringement, downloading, uploading if you accept the argument that downloading is copyright infringement, what are your damages? $150,000 per song!

Matthew Oppenheim:

You're a lawyer. Be accurate. Tell them the truth.

Robert Hamilton:

This is what's alleged in the complaints. $150,000 per song.

Matthew Oppenheim:

That's not true, Bob. That is simply not true. There is absolutely no allegation in any complaint against an individual that we have filed for P2P activity where it says $150,000. What the law says, since he won't tell them, the law -- not us -- we don't set the law, a bunch of Senators and Congressmen set the law -- the law says, $750 to $150,000. The judge gets to decide. Every lawsuit we've filed from a P2P perspective specifies no damages whatsoever. And do you know what the average is of the settlements we've reached in these cases? It's been less than $5,000. So you can talk about $150,000, but it's not accurate and it's irresponsible.

Tracy Mitrano: [40 minutes 20 seconds]

Perhaps this is a good time in which to ask: Is copyright law out of balance?

Matthew Oppenheim:

I'll let him go first.

Robert Hamilton:

Is copyright law out of balance? There's a lot of ways ... The technology is changing in ways that the law and society is having a difficult time grappling with. A lot of the development of the law over the past few years has been primarily a reaction to the capabilities of the technology, and as the technology's capabilities is changing, we get new legal questions that we can't derive the answers from the old laws because the old laws were based on the old technological capabilities. If you buy the concept that intellectual property is property in the traditional sense, then it would follow from that that the owner of the intellectual property should be able to maximize or exploit technology to its fullest to protect his or her property. Property is, in the end, the right to exclusive use or enjoyment of the property. You can exclude everybody else from it. That's what property is, that's what private property is in western legal thought: the right to exclusive use. And if you have the right to exclusive use and can enforce it through the law, with cops and trespass law, then you can charge people for using your property, sharing your right to enjoy that property. And if you allow that structure of property to apply to intellectual property, then you allow the copyright owners to exploit technology to charge for every conceivable use by the public of their property. All the things that we now take for granted as being legal, that we should be able to do for free, things that typically would be considered "that's a fair use" in our society, technology is now changing where the copyright owner will be able to use encryption and various types of technological protections where they can charge you for every single use, every time you read something in a library, every time you want to listen to a song you've got to pay. It would eliminate the first sales jobs, if you buy a CD you won't be able to sell it to someone else because there won't be any CDs any more, so you won't be able to share your music with your friends. Every time you listen to a song you have to pay. All of that could conceivably happen. If you buy the concept that intellectual property is the same as real property, that follows legally.

If, on the other hand, you don't think that intellectual property is the same as real property, that intellectual property is more a balance where we've got to get enough money into the hands of the creator of the content to give them an adequate incentive to create the content, but allow the public enough rights to enjoy and use that content in ways that maximizes the effusiveness and value to society, it's a balance. That has essentially been the Supreme Court's balancing test, ultimately for the fair use doctrine, and it is a big philosophical debate among legal scholars as to what is the appropriate construct among intellectual property law in that context. Do we give the owners of intellectual property the right to exclude all uses and charge for it, or is it a balance? And if you take the latter, it can be really hard to figure out what the appropriate balance is because the technology allows for such exploitation by not only the users, and the piracy that's going on with Napster and file sharing, but also with the encryption things and copyright things that are allowing copyright owners to restrict and prevent uses that have traditionally been considered free and appropriate use. [To Tracy Mitrano] That's the best I can do.

Tracy Mitrano: [44 minutes 22 seconds]

(inaudible)

Matthew Oppenheim:

Sure, I'll react. It's hard to imagine that copyright law should be weakened toward the copyright owners, because right now the copyright owners are -- what did you call it, a riot? where they're having difficulty even coming close to enforcing their rights, enjoying compensation for what they do. The idea that copyright law might be too strong seems to me to be a simply incredible proposition. The question is, really, not whether or not copyright law is too strong in favor of copyright owners, because we can see right now that copyright holders are suffering and suffering mightily, the question is, Are we adequately enforcing and educating on copyright issues? And the answer is no. The idea that we are doing something that is out of bounds by filing suits against a couple hundred people who were distributing each thousands--thousands!--of copyrighted works, that that is an outrageous use of our enforcement aim, is crazy. Of course you would expect, if somebody went into Best Buy and stole a thousand items, of course you'd expect Best Buy to enforce against that person. Pick any other population. So I think that not enforcing it, thetion way the government is enforcing it ... I also don't think we're educating, that a lot of people don't understand the copyright issues and it's only of late because we're enforcing on these issues that it's coming into a dialog.

Did any of you read about the grandfather we sued by the name of Derwin Pickle? ... One of the suits that we filed was against a seventy-something-year-old gentleman by the name of Derwin Pickle, who was as delightful as his name, and he was really a very nice guy. And when he got the suit, at first he was outraged at us. He called us, "What is this all about?" and so on and so forth was his reaction to the theft. And when we explained to him what it was all about, he was no longer outraged at us, he was outraged at his grandchildren, who had come over to his house and engaged in this behavior. And apparently Mr. Pickle called a family meeting. Yes, in the Pickle household, family meetings are a serious event. The sons came over and the grandchildren came over, and Mr. Pickle laid down the law. He was going to settle the lawsuit, he was going to force each of his sons to pay up $1,000 each, he was going to chip in $1,000, and that the kids were going to work off by chores the debt to the parents. And that they then had a long family discussion, apparently, about the issue of stealing music on the Internet. Well, we would much rather not have had to sue Derwood Pickle in order to get that family to talk about that issue. But unfortunately, before we started enforcing, families weren't having those discussions. And families need to be having those discussions. We need to be having these kinds of debates so that people can talk about that stealing on the Internet is stealing nonetheless.

Robert Hamilton: [48 minutes 04 seconds]

I'm sorry, it is not stealing nonetheless. It's not stealing to tape record on a cassette tape a song being played on the radio. From the user's perspective, it is the exact same conduct. The only difference between taping a song on a casette tape off the radio -- which by the way is not only moral and legal, it's protected by a statute passed by Congress -- all right, the only difference between taping a song on a cassette tape off the radio and downloading a song, an MP3, off the Internet, is the economic impact on the industry that we talked about. That's the only difference morally. And if you word it like that, it tells you the moral question is all about getting the man paid. That's it. And to say, it's just stealing nonetheless, it's like walking in and stealing 100 TVs, is just ignoring the reality of what we just witnessed when we did this survey, where 100% said stealing the TVs is morally wrong, and 100% said taping a song off the airwaves is morally okay, and 90% said it's morally okay to download a song on the Internet. It is not the same, and people can get up here and say till they're blue in the face that it's the same, but they will never convince people of that. And you've got to ask yourself, Why? Why do we feel this way? Are we all just rationalizing our desire to get something for free? Are we all that morally bankrupt? I don't think so. I really do believe, deep down, we don't believe that copying and sharing content is morally wrong.

Matthew Oppenheim: [49 minutes 48 seconds]

He had his moment, I get mine too. Bob, again, that's not the whole story here. None of these lawsuits are for people downloading. And when Bob asked the qeestion about if you go into the store and you steal the CD and you record it onto tapes and you start selling the tapes to others, almost everybody raised their hand and said they thought that was wrong. And that's what these lawsuits are about. These lawsuits are about people distributing, uploading. We are not targeting anybody who simply downloads. So you can keep talking about downloading, downloading, downloading, and you can get your blood pressure all worked up into it, but it's not about downloading, it's about distributing.

Robert Hamilton:

In the Napster litigation...

Matthew Oppenheim:

Wait a minute, Bob, hold on. It's not a matter of one person making one copy. When you're distributing on one of these networks, you're making available to four million other people a copy of a recording you have no right to be distributing because you are not the artist, you didn't sweat over it, you're not the drummer in the background who gets paid on the royalties, you're not the copyright owner who gave an advance to the artist to write the song, you're not the songwriter, you have no rights -- no rights! -- to be distributing somebody else's work. You're nothing more than a fence.

Robert Hamilton: [51 minutes 07 seconds]

And in the Napster litigation the RIAA argued that downloading by users was infringing and the District Court for the Ninth Circuit said it was infringing. It's a position now that the RIAA is taking that downloading off the net is not infringing, we have a new scoop here, call the New York Times. Number 2...

Matthew Oppenheim:

I'm not saying that we changed our legal position, what I'm saying is, that if you're complaining about the lawsuits we're filing, the lawsuits we're filing against individuals are only for the distribution of works to billions of other people.

Robert Hamilton: [51 minutes 39 seconds]

That is true today, and I agree with that, and I would have two comments or observations about that.

Matthew Oppenheim:

I want to just enjoy that.

Robert Hamilton: [51 minutes 39 seconds]

Okay. I'm being paid here to be your antagonist. If you want to pay me to represent you, I will. [Audience laughter]

Matthew Oppenheim:

That's what it's all about. He's the man, he just wants to be paid.

Robert Hamilton:

All right. When I came here last summer for the CPL, I arrived late and got into the Statler Hotel about 11:30, and I went where I always go, directly to the bar. And it was late, there was no one there except the bartender. He was a student here at Cornell. I have conveniently forgotten his name forever. And I sat down at the bar. He said, "How are you doing, what'll you have?" and I said "Pour me a scotch on the rocks." So he gets the glass, fills it with ice, and he gets his bottle of scotch with the little regulator on the top and starts to pour me my shot of scotch, and the regulator falls off the top of the bottle, all this scotch pours into my glass, and all of a sudden instead of a shot I have a triple, not a double but a triple of scotch. And I said, "You know, there's not many people in the world other than me and Harry Potter that can make that happen." And the bartender says, "You know, funny you should mention that. I just downloaded the most recent Harry Potter book off the net last night." And I said, "Say what?" and we got into an interesting discussion about file sharing on Cornell's campus.

Transcript to be continued...