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In a recent column we wrote about the legal battle over the extent of "fair use," a legal principle that allows limited copying of copyright material. Owners of copyrights, for example music and software publishers, would like to have the maximum amount of control over their intellectual property, that is, the ability to limit copying as much as possible. However, purchasers also want as much control as possible. While they may acknowledge that a song or a computer program is in fact property and that unauthorized copying is theft, they may also feel that once they pay for it, it becomes their property, not that of the seller.
This tension is played out in two distinct arenas: the legal system and the marketplace.
In the legal system, the consumer's interest is backed by the doctrine of fair use and by the "doctrine of first sale," which states that once you buy a copyrighted work you can re-sell or otherwise transfer it. But the legal rights of consumers have been somewhat eroded in recent years by a number of developments. One, mostly relevant to computer programs, is the efforts of sellers to tell customers that they own only a license to the program, not the program itself. Another, equally relevant to music, is the Digital Millenium Copyright Act (DMCA) in the US and comparable legislation in Europe, which gave greater legal powers to copyright owners. Technically, the publishers enforce their control through a technology known as Digital Rights Management (DRM), which enables them to instruct devices not to make copies.
Intellectual property rights are ultimately meant to serve the public interest; they give rights to creators in order to give an incentive to create, but the ultimate goal is to provide content to the public.
The US Constitution gives Congress the right to grant intellectual property rights specifically "to promote the progress of science and the useful arts." Many scholars feel that DMCA, DRM and other developments constitute lopsided legislation that upsets the appropriate balance between the private and public interest. We have written in the past about a similar disturbing tendency in patents.
One way to restore an appropriate balance of rights is through the legal system. Fortunately, this is not only a battle of the little guy against the giant corporations that tend to have disproportionate influence on legislators. Many corporations have their own interest in more lenient protection, particularly Google, which wants to "set information free" as much as many open-content activists. As we wrote recently, Google and other large firms have joined the legal fray against excessive enforcement of copyrights and in favor of a more traditional understanding of fair use; as we also wrote, a recent US Supreme Court decision reversed much of the previous, misguided policy of giving patents to ideas which were not truly innovative.
But another way of restoring balance is through the market. I may have the legal right to strictly control a customer's use of my product, but the customer has the legal right to refuse to buy.
For years, observers (including myself) have been predicting that the music industry would eventually see that it is counterproductive for them to be overly protective and that the music customer is willing to pay a fair price for a fair degree of control over songs. In the meantime, a few companies have gone bust betting this would happen - the foremost being Napster.
Napster provided free and illegal access to copyrighted songs, but its business model is widely assumed to have been to pressure the record companies into using its interface to sell songs legally. (This model has been very partially realized by a partnership with Bertelsmann.)
I think that finally market pressure is working in this direction. In April, London music company EMI began to make some songs available without the copy protection; recently, Universal Music Group joined in. Many independent labels have spurned DRM all along.
The most popular on-line song distribution channel, Apple's iTunes, in May, began to offer songs without copy protection for an extra 30 cents - $1.29 instead of the usual iTunes rate of 99 cents. This week, Wal-Mart's on-line store started offering them for less than a dollar.
Obviously, the success of the new service will determine its future course. If sales of the DRM-free songs start to soar, the publishers will figure out that their sophisticated anti-piracy rights and technologies are working to their disadvantage by alienating the paying customer. I believe that this will be the case, and that the consumer sovereignty of the marketplace will start to restore the freedoms that the legal system has failed to provide.
The author is research director at the Business Ethics Center of Jerusalem (www.besr.org), an independent institute in the Jerusalem College of Technology.
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