Intellectual Property Rights free essay sample

Intellectual Property Rights: Music Piracy and Technology J. A. Taylor University of Maryland University College 0902ECON2017983 Dr. Charles Nwaka May 09, 2009 Intellectual Property Rights: Music Piracy and Technology The focus of this research paper is to examine the history of Intellectual Property Rights, with an emphasis on the authorized and unauthorized digital downloads of copyrighted music. Intellectual property rights and its relevance in the policing the music industry has been debated by many for years. With the increasing rate of advancements in technology, most certainly outpacing the policing of music piracy, the violation of intellectual property rights will continue on a global scale. The state of the music industry has drastically changed over the last ten years due to advancements in technology and the prevalent utilization of the internet and the popularity of peer-to-peer (P2P) networks. Today, the availability of audio and video content is available to the masses. Where consumers used to purchase compact discs of their favorite artist, now with an internet connection and a few clicks of the mouse, they can enjoy the music of their favorite artist without having to leave the comfort of their home. We will write a custom essay sample on Intellectual Property Rights or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page With compression technologies, such as MP3s, electronic distribution of music is quick and easy, legally and illegally, with the later being the case much of the time. The arguments as to how much the music industry has been affected by music piracy are varied but consistently the numbers are large in scale. To begin, I will provide a brief history of Intellectual Property Rights, discussing its origin. I will then discuss how advancements in technology, specifically the internet, have outpaced intellectual property rights and the protection that they were designed for. There has been much empirical literature on this subject, so I will discuss some of these findings as well. I will then present statistics on music piracy and their purported effects on music sales, whether intellectual property rights are effective in preventing illegal and unauthorized downloads, and initiatives in place and some that are being discussed to limit or combat copyright infringement. The U. S. Congress enacted the first copyright legislation with the Copyright Act of 1790 designed to provide exclusive rights to authors of maps, charts and book. The act provided American authors exclusive rights to their works for a term of 14 years, with the right of renewal for an additional 14 year term if the author was still alive. While American authors had laws in place to protect their works, the Copyright Act of 1790 did not provide the same protection to foreign authors. This United States refusal to recognize the works of foreigner continued for over 100 years, when in 1891 Congress passed an international copyright act. Additionally, no protection was afforded to works such as musical compositions or newspapers during the initial copyright act. The Copyright Act of 1790 has undergone many revisions over the years. It has been modified many times to encompass new technologies such as music recordings. It has also been modified to extend the length of the term of protection and the length of the extension one receives when the initialterm expires. In 1909, the U. S. Copyright Act was revised to include all works of authorship, including music. From sheet music to the player piano and the compact disc, mechanical rights cover the mechanical reproduction of music. In this case, the copyright holder usually administers these rights directly, but mechanical rights are unique in that anyone is allowed to record a song once the copyright owner has done so or has allowed it to be recorded by others. Once this is done, a fee or royalties is paid to the copyright holder. The compulsory rate is currently 6. 95 cents per song per recording, or 1. 3 cents per minute, whichever is larger. ()Inevitably, whenever a new technology is introduced, it is soon followed by the extension of copyright laws to deal with the new technology and protect the works. The advancements in information technology have been rapid. With the introduction of the personal computer in 1977, the World Wide Web in 1989 and the first mass-market web browser, Netscape in 1994 the information highway has expanded. Now that most information is born digital and this digital information is typically very easy to copy and disseminate, it is conceivable that copyright laws may become almost impossible to enforce in the world of music. () The International Federation of the Phonographic Industry (IFPI) has taken the lead on trying to enforce copyright laws for the music industry with 500,000 infringing links removed in 2007. The IFPI represents the recording industry worldwide, with 1400 members in 72 countries and affiliated industry associations in 44 countries. The IFPI, collating separate studies in 16 countries over a four-year period, estimated unauthorized file-sharing at over 40 billion files in 2008 alone. This means that globally around 95 percent of music tracks are downloaded without payment to the artist or the music company. () Even with this staggering report of the amount of illegally downloaded digital music, the RIAA has reported that the sales of digital music continued growing at a rapid pace in 2008. In fact, the RIAA states that digital music now constitutes 32 percent of the total market value, and $2. 7 billion in total shipments. So, how accurate can the assessment by IFPI really be? There is much empirical literature on this subject all with different opinions as to the effect that music piracy has on the overall sales of CDs or legally purchased digital downloads. The main empirical papers in this area are Blackburn (2005), Oberholzer and Strumpf (2004), Rob and Waldfogel (2004) and Zentner (2006). Blackburn (2005) examines the effect of on-line downloads in music retail sales and finds that on-line downloads work as demand advertisements for small artists, but they work as demand substitutes for big artists. Rob and Waldfogel (2004) collect data on album purchase and download, and find that each download decreases purchase probability by 20 percent. They also find, thanks to valuation data, that downloading decreases expenditure and increase the welfare of those downloading except for the musician. Zentner (2006) uses a European cross section data set to estimate the effect of music downloads on purchasing probability. He finds that peer-to-peer usage reduces the probability of purchases by 30%. Finally, Oberholzer and Strumpf (2004) find that downloading has no statistical or significant economic impact on music purchases. ) Boldrin and Levine, both professors of economics in Arts Sciences at Washington University in St. Louis, argue that there is plenty of money in the distributing and selling of digital content via the Web without the obstacles created by DRM for consumers who legally purchase the digital files. () Hui and Png estimate losses from piracy to be lower than claimed by t he industry. They also find that publishers would have reduced prices in order to dissuade piracy, suggesting that the true revenue loss would have been higher than reported. ) Based on the numerous journal articles and papers I have read on the subject, I tend to agree with Hui Png. With music purchases in 2008 reaching 1. 5 billion, marking the fourth consecutive year music sales have exceeded 1 billion, one would have to come to such a position. To believe the IFPIs purported statement of 95 percent of downloaded music to be of the illegal nature with the remaining 5 percent being legal and contributing to 1. 5 billion in sales is quite a stretch. Another more recent study found that internet music piracy does not hurt legitimate CD sales and it may in fact boost the sales. The rationale behind this way of thinking was that the consumers who downloaded music on P2P networks were college students who would not have bought a CD anyway. By access to P2P network, they can sample music for free and then buy the legal copy if they like, so in affect the file-sharing network stimulates demand and profits. () Adding to the complexity of enforcing the copyright laws for the music industry is the equally accessible black market. The black market for music is astounding. From the mom and pop shops, to the local barber shop, the street entrepreneurs of the urban communities trying to make a profit are in abundance. The products of choice for many of these entrepreneurs are bootleg CDs and movies. As a military member I have had the opportunity to travel to many countries. If there is one thing that is the same from Korea to Japan to the deserts of Iraq and Afghanistan, it is the black market is alive and well. What I have also found, is that these countries do not think the selling of bootleg CDs, as piracy. They only see it as they are a firm or business with a good or service to provide to the consumer and with no law enforcement to regulate, they operate unabatedly. Enforcement of copyright laws or the lack of enforcement depending upon who you ask has not been for lack of trying. The case brought against the creator and owner of Napster for one highlighted the lengths to which the government would go to protect the copyrights of musicians. The original Napster was the first major file sharing tool and popularized file sharing for the masses. While it was a P2P network, it was not considered P2P in the same sense of websites such as Kazaa. This was because Napster relied on central servers to maintain lists of connected systems and the files users provided. This meant that actual transactions, the transferring of MP3s, were occurring machine to machine. The drawback to this type of infrastructure was that if the computer in which your computer was communicating with shut down, then the transfer of your requested file would terminate. () This case also shined a bright light onto what at its infancy seemed to be harmless and something created for friends who loved music. When Shawn Fanning created Napster in early 1999 while attending Bostons Northeastern University, an idea born out of frustration with MP3. om and others, no one could have foresaw the attention, to which the sharing of MP3s on P2P networks would bring, especially the legal ramifications the sharing of copyrighted music would bring. More than 60 million users took notice and advantage of this new internet sensation. The Recording Industry Association of America (RIAA) also took notice and in December 1999, on the behalf of every major record label in the music industry, i nitiated legal actions against Napster for copyright infringement. Napster did not dispute the allegations leveled against them, therefore the court held that at least some of the Napsters users were direct infringers. The district court ordered Napster to monitor the activities of its network to block access to infringing material. Napster consequently shut down its service in July 2001, and the trademark name was sold to Roxio in October 2003 amid bankruptcy. () As a result of thisand other cases, digital reproduction, international commerce, and digital music sampling have exposed gaps in the laws ability to deal with new forms of production and new technologies. Powerful interests have argued for stronger restrictions that intimidate artists, musicians, and computer hobbyists into respecting property rights at the expense of creative liberty. Others have abandoned all hope of legally constraining piracy and sampling, and have instead advocated a system of electronic locks and gates that would restrict access to only those who agree to follow certain strict guidelines. (Vaidhyanathan, 2001) One such lock or gateemployed to combat music piracy, is the implementation of the Digital Rights Management (DRM) technology. DRM is a technology most will recognize from digital music files downloaded legally from ITunes. DRM allows copyright holders to control how music is distributed online. DRM technologies also can restrict the number of times a user can play a certain file, prevent the file from being copied and passed to others, restrict the number of copies that can be made, or prevent the copying of the file altogether. (Jaisingh, 2007) Along with DRM technologies, the music industry has been calling for the creation of proprietary formats, including ompression, encryption and rights management technologies. The thought process being to make the copying of the original digital copy so expensive that it discourages the consumer from making the copy available for download or hardcopy by using a combination of encryption and digital rights management system. A more recent initiative at the urging of the IFPI, is enlisting the assistance of the Internet Service Providers (ISPs) in order to track the of fenders at the source. The principle that ISPs should play a greater role in protecting online content is moving from concept to implementation. The music industry first proposed a solution to the online piracy problem extending responsibility for copyright protection across the value chain to include ISPs in 2005. Three years later, government-backed systems of ISP cooperation are being advanced or considered in many countries. (Kennedy, 2009)The government of France is one of the first to require steps by ISPs to deter piracy. In 2008 France adopted a law called Creation and Internet Law which sets up a graduated response for ISPs to warn copyright abusers. The system targets persistent abusers who ignore the warnings and are then punished with loss of internet access for one to twelve months. The governments of the United States, United Kingdom, New Zealand and Australia are all moving towards adopting similar systems of graduated response, with other government soon to follow. My research as it pertains to intellectual property rights, its applicability within the music industry and the effectiveness of the initiatives in place to combat copyright infringement, has led me to believe that you can never really rid the industry of music piracy. One has to wonder whether or not when CDs are sold in the stores, whether the record companies put them out and price them as such with a reasonable expectation that piracy will occur. I truly believe that there is a certain amount of unauthorized copying that is expected. How else can you explain level of illegal downloads, especially when it comes to the pre-release downloads that occur with increased frequency. Pre-release copies are leaked days and weeks before the official release date and the number of files containing this music spreads like wildfire. Who else but the record companies would leak these records earlier than advertised? It is a calculated method to gauge the interest and potentially selling power of their product. It is a fact that consumers typically have a higher regard for a good or service if other consumers hold the good or service in the same regard. Because of this, firms can charge a higher price for the good or service with the expectation that it will eventually be pirated. The initiatives being discussed to combat illegal download and distribution of music such as encryption and DRM may reduce the level of music piracy but will not eliminate it all together. With every new technology, there is equal money and time by software designers by profession orhobby in the developing of measures to defeat safeguards such as encryption and DRM technologies. It is these individuals with the technical knowhow, which will continue to make the products available to the masses. Additionally, companies such as ITunes that employ this type of technology on music downloads will eventually abandon the practice, evidenced by statements from Steve Jobs.