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Kazaa: Serve Consumers, Not Subpoenas

WASHINGTON -- Executives from the music and motion picture industries told a Senate panel Tuesday that until peer-to-peer (P2P) software companies begin to act responsibly and proactively to discourage copyright infringement on their services, there is little chance Hollywood will negotiate licensing agreements with the popular file-sharing networks.

Among the P2P reforms called for by Mitch Bainwol, chairman and CEO of the Recording Industry Association of America (RIAA), which spent the summer filing information subpoenas and lawsuits against alleged infringers using P2P networks, were: "meaningful" disclosures to users that copyright infringement is a federal offense; filters to protect copyright content; and default settings so that users are not automatically uploading music from their hard drives.

"The law is clear. Yet understanding of the law is hazy. Why? In large part it's because the file sharing networks like Kazaa deliberately induce people to break the law," Bainwol told the Senate Judiciary Subcommittee on Permanent Investigations. "There is a brighter future around the corner if the operators of these networks just voluntarily execute these three common sense and easily implemented reforms.

Alan Morris, executive vice president of Sharman Networks, which owns and distributes Kazaa, the world's largest file sharing network, countered that P2P is the most efficient way to distribute digital media but the music and movie studios refuse to discuss licensing agreements in order to control online distribution for their own profit.

"We believe the legal attack on individuals and technology providers on the grounds of protecting copyrights is really just a smokescreen to hide the real challenge confronting the entertainment industry -- moving beyond an outdated economic model that is being rejected by the marketplace to a model for which we have a well conceived upgrade path," Morris said.

Kazaa supports a technology developed by Altnet of Woodland Hills, Calif., that, according to Morris, "wraps a file," making it secure the first time a consumer downloads it and every other time a different consumer downloads it from a fellow peer. Morris said the wrap allows the content owner to define the terms of sale to the user.

In the Altnet search technology scheme, wrapped content is delivered in priority order, "ensuring that the user will always see rights managed content before any other content."

Derek Broes, executive vice president of Altnet, told the committee as more and more content is wrapped, or licensed, illegal files are driven deeper and deeper into the system to make them much more difficult to find.

"The model can be hugely profitable for the entertainment industry. But the entertainment industry and the peer-to-peer industry must work together if this dynamic new content distribution model is going to realize its potential," Morris said. "Wouldn't it be better to sell to them (consumers) rather than sue them?"

Originally conceived as an opportunity to examine the legality of the subpoena provisions of the Digital Millennium Copyright Act (DMCA), the hearing was expanded to include an overview of online piracy and the impact of technology on the entertainment industry.

In the days leading up to the hearing, the witness list grew to three separate panels and eventually included celebrities LL Cool J and Chuck D.

"I don't want to attack the fans who love the music," LL Cool J said. "I understand that some of the CDs were a little expensive, but are we just going to give it way? A lot of things are possible, but does that make it right? Don't we people in the entertainment industry have the same right as other Americans to earn a fair living?"

Chuck D, on the other hand, said he thought P2P meant "power-to-the-people."

"Technology giveth and tecnhlogy taketh way. I'm sure the railroads resented the business the airlines took away from them," he said.

Besides, the rapper added, "I never felt my copyrights were protected anyway. I've been ducking lawyers, agents and music publishers all my life. I trust consumers."