Friday, October 27, 2006
Oct 31 Reading
When creators, corporations and consumers collide: Napster and the development of on-line music distribution
Tom McCourt, Patrick Burkart
This article discusses intellectual property, focusing mainly on the music industry and the advancements in distribution that took place during the growth of the internet. The internet became a new area for technology that allowed music to be transferred independent from the music industry. Such an atmosphere supports the Internet Nirvana Theory which is a somewhat a “naïve perspective” according to McCourt and Burkart. This theory states that the “Internet is an arena of free exchange in which everyone wins,” meaning frictionless capitalism would be created, where distributors, consumer electronics, technology companies, and service providers would all reap the benefits while the consumer is enabled limitless choices at a low cost. This theory is furthered by the Electronic Market Hypothesis which believes “networked computer technology will match buyers and sellers quickly at minimal cost.” With the growth of the entertainment industry into global markets, the Big Five record companies which include EMI, Universal, Sony, Time Warner, and BMG focused on the Old Economy of intellectual property to reinforce its’ market oligopoly. With the creation of the MP3, developed by the Motion Picture Experts Group (independent of the Big Five), a format was developed that offered no copy protections which greatly threatened the Big Fives dominance of the music industry. Therefore it was forced to adapt in other ways in order to continue profit, focusing on the control of intellectual property rights. They began to contract artist in a ‘work for hire’ bases meaning ownership of the recordings went to the companies who financed the product as well as provided the resources, such as producers, to create the work. Also in favor of the recording industry were the Sonny Bono Term Extension Act which extended existing copyright protection, and the Digital Millennium Copyright Act which made it illegal to reproduce copy-protected media. The landmark decision of the A&M Records et al. v. Napster case gave ownership of online intellectual property rights of entertainment to the industries conglomerates, therefore ceasing the unregulated transfer of copyrighted material. The success of the case alleviated anti-trust pressure from the government and also gave the record companies a legal claim over an alternate delivery system through the Internet. Later Bertelsmann of the Big Five paid Napster to develop a secure file-sharing system and other Big Five corporations soon followed suit. Concerning international growth, content is 'locked up' through ‘trusted systems’, known as Digital Rights Management and was created to avoid conflict and inconsistency in copyright enforcement. The Secure Digital Music Initiative also came about which was suppose to act as a gateway that enabled time limits, restricted copies made, and enabled a trace back to the original purchaser, yet this system has to not yet been successfully created. The music industry latest attempt to increase profit is in the form of subscription service yet this form of distribution may hinder CD sales.
Questions
1. Has the Internet Nirvana Theory been completely disproved by the Big Fives’ enforcement of copyright protection?
2. With heavy restrictions on internet distribution of music, has the internet been transformed from a “community of freely participating individuals” to a “network-delivered commodity”?
3. Should the transfer of music over the internet be a free, unrestricted process?
Tom McCourt, Patrick Burkart
This article discusses intellectual property, focusing mainly on the music industry and the advancements in distribution that took place during the growth of the internet. The internet became a new area for technology that allowed music to be transferred independent from the music industry. Such an atmosphere supports the Internet Nirvana Theory which is a somewhat a “naïve perspective” according to McCourt and Burkart. This theory states that the “Internet is an arena of free exchange in which everyone wins,” meaning frictionless capitalism would be created, where distributors, consumer electronics, technology companies, and service providers would all reap the benefits while the consumer is enabled limitless choices at a low cost. This theory is furthered by the Electronic Market Hypothesis which believes “networked computer technology will match buyers and sellers quickly at minimal cost.” With the growth of the entertainment industry into global markets, the Big Five record companies which include EMI, Universal, Sony, Time Warner, and BMG focused on the Old Economy of intellectual property to reinforce its’ market oligopoly. With the creation of the MP3, developed by the Motion Picture Experts Group (independent of the Big Five), a format was developed that offered no copy protections which greatly threatened the Big Fives dominance of the music industry. Therefore it was forced to adapt in other ways in order to continue profit, focusing on the control of intellectual property rights. They began to contract artist in a ‘work for hire’ bases meaning ownership of the recordings went to the companies who financed the product as well as provided the resources, such as producers, to create the work. Also in favor of the recording industry were the Sonny Bono Term Extension Act which extended existing copyright protection, and the Digital Millennium Copyright Act which made it illegal to reproduce copy-protected media. The landmark decision of the A&M Records et al. v. Napster case gave ownership of online intellectual property rights of entertainment to the industries conglomerates, therefore ceasing the unregulated transfer of copyrighted material. The success of the case alleviated anti-trust pressure from the government and also gave the record companies a legal claim over an alternate delivery system through the Internet. Later Bertelsmann of the Big Five paid Napster to develop a secure file-sharing system and other Big Five corporations soon followed suit. Concerning international growth, content is 'locked up' through ‘trusted systems’, known as Digital Rights Management and was created to avoid conflict and inconsistency in copyright enforcement. The Secure Digital Music Initiative also came about which was suppose to act as a gateway that enabled time limits, restricted copies made, and enabled a trace back to the original purchaser, yet this system has to not yet been successfully created. The music industry latest attempt to increase profit is in the form of subscription service yet this form of distribution may hinder CD sales.
Questions
1. Has the Internet Nirvana Theory been completely disproved by the Big Fives’ enforcement of copyright protection?
2. With heavy restrictions on internet distribution of music, has the internet been transformed from a “community of freely participating individuals” to a “network-delivered commodity”?
3. Should the transfer of music over the internet be a free, unrestricted process?
