December 13, 2004
Volume 7, Issue 3
High Court to Address P2P Dispute
By Sarah Stirland in Technology Daily
The Supreme Court on Friday agreed to hear a case that will give the court a voice in the legal and rhetorical boxing match over whether file-sharing software providers should be held liable for users who steal music, movies, and other copyrighted material.
The court agreed to review a 9th US Circuit Appeals Court ruling issued in August. That ruling found that Grokster was not liable for copyright infringement by its users because the software provider does not engage in direct piracy and the software has other legal uses.
Both the movie and music industries had asked the high court to review the ruling, which relied heavily on the precedent of a 1984 Supreme Court decision, Sony v. Universal City Studios, known informally as the Betamax doctrine. That ruling says that technology companies cannot be held liable for copyright infringement if their products have substantial non-infringing uses.
Leaders for the entertainment industry on Friday hailed the high court's decision to take the case. MPAA President & CEO Dan Glickman praised the Supreme Court in a statement. "By taking this case, the court has the ability to address the legal liability of companies that abuse and profit from technologies whose primary use is to illegally redistribute copyrighted materials," he said.
But representatives from public-interest groups and technology industries who had called on the court not to take the case said the decision would not necessarily be resolved in the entertainment industry's favor.
"We'd have preferred that they didn't take the case," said Gigi Sohn, President of Public Knowledge. "But we think they'll reaffirm the 9th circuit....There's no evidence for why it should be overturned." She said the court repeatedly has said that difficult copyright questions should be settled by Congress and not in the high court.
RIAA Chairman & CEO Mitch Bainwol stressed the important questions at hand. "There are seminal issues before the court – the future of the creative industries and legitimate Internet commerce," he said. "These are questions not about a particular technology but the abuse of that technology by practitioners of a parasitical business model."
SMARTguard to Unveil Blockster
DCIA Member SMARTguard Software, a provider of tools for helping parents address the problems of illegal, inappropriate, and excessive computer use, is announcing Blockster, a software program that exclusively monitors peer-to-peer (P2P) program use to restrict illegal downloads of copyrighted materials, such as movies and music, and prevents children's access to pornography.
SMARTguard will present its technology during a panel at the Federal Trade Commission's (FTC) public workshop on P2P file sharing being held this Wednesday and Thursday, December 15th and 16th, in Washington, DC.
According to SMARTguard, "Research indicates that children and adolescents living at home are responsible for 50% of illegal file downloads of music, movies, and software, and have unrestricted access to pornography. Often parents don't know how their children are using P2P programs, or the potential health, safety, and legal risks. Blockster is a simple-to-use software program that addresses this problem by automatically recognizing and restricting P2P program access."
"We are working with the entertainment industry, including record, movie, and software companies, to distribute our software to parents," said Tom Sperry, CEO. "It is important to both families and entertainment companies that P2P file sharing be used appropriately. A simple tool like Blockster that allows parents to set limits for their children will benefit everyone."
SMARTguard will participate in "Technological Responses to Protect Consumers Using P2P File-Sharing Programs" at the FTC workshop on December 15th at 11:30 AM.
SMARTguard Software was founded by two medical doctors to provide software tools to help parents address problems associated with computer abuse. Based in Portland, OR, the company is focused on addressing computer gaming and P2P applications.
For more information on Blockster and a free software trial, please visit www.smartguardsoftware.com.
Report from CEO Marty Lafferty
 With the US Supreme Court's decision Friday to review the MGM v. Grokster case, the FTC public workshop this week focusing on peer-to-peer (P2P) file sharing could not be more timely.
For the benefit of the Court as well as Congress, it is now more important than ever that there be a factual public record of our nascent industry's progress.
The workshop will include panel presentations on risk disclosures to consumers relating to P2P file sharing, and the development of technological solutions, such as blocking software and filtering mechanisms, to protect consumers using such programs. It is being held at the FTC Conference Center.
Our industry's opponents continue to disseminate misinformation ranging from the nature of business models to the character of companies involved in commercially developing P2P and other distributed computing programs. The reality is that our industry's participants have been notably responsive and accountable in advancing what are still very new technologies.
This begins with the P2P software developers and distributors themselves, who will be represented at the FTC workshop by Sam Yagan, CEO of P2P Revenue Engine (P2PRE) participant MetaMachine (owner of eDonkey), and Marc Freedman, CEO of DCIA Member RazorPop (owner of TrustyFiles). Firms like these have established higher standards among software providers for self-regulation and continual improvement of the quality, safety, and value of their user experience than had their predecessors among web-based applications.
It extends to innovative companies now engaged in entertainment distribution via P2P, who will be represented by Les Ottolenghi, CEO of DCIA Member INTENT MediaWorks and leader of the P2PRE project. With companies like this, it is no wonder that P2P now represents the largest medium for licensed content transactions on the Internet. File sharing is creating opportunities for independent content providers and individual performing artists, who had been denied participation under the old closed systems of major labels and studios, to earn an income in their chosen profession and generate revenue.
And it includes a host of promising new organizations focused on service-and-support functions, ranging from industry research to enforcement forensics to content filtering to parental controls to user protection to Internet education, who will be represented by BigChampagne's Adam Toll, BayTSP's Mark Ishikawa, Audible Magic's Vance Ikezoye, SMARTguard Software's Jerald Block, SurfControl's Bob Kessinger, and WiredSafety's Parry Aftab, respectively.
We are grateful for the interest that the Federal Trade Commission has taken in this young industry's efforts at self-regulation. We hope the FTC letter sent last week to Congress will help foster a better understanding on the Hill of the realities of P2P technologies and of the actions being taken by responsible parties to commercially develop this new distribution channel.
For those who have not yet read this letter, it explains in detail how industry members have voluntarily proposed new risk disclosures that have the potential to be a substantial improvement over current practices.
Last summer, the FTC urged distributors of P2P file-sharing software programs to increase both the amount of risk information that they provide about their products as well as the clarity and conspicuousness of such information.
FTC staff provided its guidance document addressing how to disclose information in an online context, and permitted P2P software distributors to incorporate a prominent link to the FTC's online consumer education brochure on the risks of file-sharing programs.
In response, the DCIA convened a voluntary Consumer Disclosures Working Group (CDWG), led by our Best Practices leader, Elaine Reiss, open to participation among the twelve leading global P2P companies. CDWG benefited from active participation at various levels from nearly all of them. CDWG collaborated closely with federal regulatory agencies on its work product "P2P Software Risks" that it is now demonstrating for interested Members of Congress to get final input before implementation.
The DCIA's original idea was to have an industry-wide solution representing consensus on this important issue, and we would be glad to integrate CDWG's work with other efforts to complete this project in a way that is best for consumers.
In addition, each of the five CDWG-identified issues merits more work than merely an effective disclosure regime.
For example, the issue of copyright infringement needs to be addressed by new business models that will make it attractive for major entertainment interests to license their content for P2P distribution. The P2P Revenue Engine, P2P Music Models, and the proposed Peer-to-Peer Distribution of Copyrighted Works Development Act (PDCWDA) exemplify additional proactive responses by industry participants to this key issue.
Child pornography needs to be addressed by initiatives like P2P PATROL (Peer-to-Peer Parents And Teens React On Line), that provide enforcement, deterrence, and education programs developed to respond to unique requirements of the P2P environment. The newly launched P2P PATROL website, for example, promises to provide P2P users with the tools they need to recognize, remove, and report criminally obscene content inadvertently encountered online.
The DCIA represents content, software, and service companies (three groups), that we believe are necessary for commercial development of this still young industry. While the trade association has grown from two to more than thirty Members with balanced representation from these primary areas, we still have a long way to go to fully realize the potential of this promising and exciting new business opportunity.
Claria Gets Clearer, Pares EULA
By Ross Fadner in Media Daily News
DCIA Member Claria Corporation is planning to chop its end-user license agreement in half, from nearly 6,000 words to around 2,500 words, Reed Freeman, the company's Chief Privacy Officer, told MDN last Thursday.
The new agreement is expected to rollout on a test basis within the next few days, said Claria's Chief Marketing Officer Scott Eagle.
Freeman, a lawyer and former staff attorney for the Federal Trade Commission's Bureau of Consumer Protection, said that the company's main concern is that its 40 million consumer users understand that they'll be receiving ads after downloading Claria's adware program. "The world is moving towards transparency and control," he said.
Typically, consumers receive ads served by Claria after downloading a free version of a software program such as Kazaa. "The proposition is: free software in exchange for receiving advertising," said Freeman.
Two-Thirds of Artists See Minimal P2P Threat
Digital Media Wire
Two-thirds of artists questioned in a recent survey said that peer-to-peer (P2P) file sharing poses a minor threat or no threat at all to them, in stark contrast to the recording industry's claims that file sharing hurts artists.
The Pew Internet & American Life Project survey also found that 47% of all artists surveyed agree that file-sharing programs are bad, because they don't ask permission to copy or compensate artists, but 43% also said that file sharing programs aren't really bad because of the promotional value and distribution opportunities presented by P2P.
Only about half of all artists said they believe it should be illegal for Internet users to swap songs using file-sharing programs, and only 28% said they consider file sharing a major threat to creative industries. Thirty-seven percent of artists surveyed said they thought file sharing should be legal.
"Some in the policy community and in media companies have feared that the Internet would bring financial Armageddon to musicians and other artists," said the Pew Internet Project's Mary Madden. "What we hear from a wide spectrum of artists is that, despite the real challenges of protecting work online, the Internet has opened new ways for them to exercise their imaginations and sell their creations."
Coming Events of Interest
- P2P File-Sharing: Consumer Protection and Competition Issues - The Federal Trade Commission (FTC) will host a public workshop December 15th-16th to explore consumer protection and competition issues associated with the distribution and use of P2P file-sharing software.
The workshop is intended to provide an opportunity to learn how P2P file-sharing works and to discuss current and future applications of the technology. A detailed agenda and additional information on the workshop will be posted on the FTC's web site at FTC P2P Workshop Agenda.
The workshop will focus on uses of P2P file-sharing technology, the role of P2P file-sharing technology in the economy, identification and disclosure of P2P file-sharing software program risks, technological solutions to protect consumers from risks associated with P2P file-sharing software programs, P2P file-sharing and music distribution, and P2P file-sharing and its impact on copyright holders.
- Digital Hollywood at CES 2005 - Digital Hollywood will present a full program at the Consumer Electronics Show in the Las Vegas Convention Center North Hall, January 6th-8th.
The DCIA is proud to moderate "Next Generation P2P Music and Film - DRM, Paid for Pass-Along, and Other Distributed Computing Models and the Entertainment Industries" featuring Adrian Sexton, Executive Director, Business Development, Lions Gate Entertainment; Richard Conlon, VP Licensing, BMI; Derek Broes, Windows Client Strategic Relations & Policy, Microsoft; Marc Morgenstern, Vice President, Overpeer; Mark Ishikawa, Chief Executive and Technology Officer, BayTSP; Michael Weiss, President & CEO, StreamCast Networks, and Gerd Leonhard, CEO, ThinkAndLink.biz and Senior Advisor, Media Rights Technologies.
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P2P PATROL - Parents And Teens React On Line - The industry's anti-child-pornography initiative will hold its quarterly working session with private sector and law enforcement representatives in Dallas, TX on February 1st. For more information and to learn how you can contribute to P2P PATROL, please contact sari@dcia.info or call 888-864-DCIA.
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The DCIA will hold its Winter General Meeting the evening of February 9th in conjunction with MSNY. Please contact Member Services leader Karen Kaplowitz at 888-890-4240 or karen@dcia.info for more information.
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