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What constitutes "fair use"?

Veteran software entrepreneur Marc Canter says the big labels and studios are badly misinterpreting the legal ramifications of digital distribution as it applies to music and movies. The upshot: consumers lose out big time.

Recent efforts by the music industry to stop Napster from its "unlawful distribution of music" have brought new scrutiny to the music industry's own illegal activities.

As artists such as Courtney Love are apt to point out, musical acts' contracts, price fixing and "Mafia-style" strangleholds on distribution channels are just some of the techniques the music industry has used for years to stay in power and to control the business.

As the potential for digital distribution of both music and movies comes into focus, it should be pointed out that the labels and studios knew full well many years ago that this day and age was coming. However, because of inherent bureaucracy, they resisted any effort to allow digital distribution of anything.

Their greatest fear was that they would lose the one thing that has kept them in business: total control over the distribution channels to customers.

But despite all the lambasting, lawsuits and accusations, the one detail that seems to have gone unnoticed is that built into the copyright laws is an inherent right of what's called "fair use." I'm not a lawyer, but I've spent a lot of money on them over the years, and as far as I understand the battles over copyright law, the one thing consumers have is their right to "use" their purchase of someone's copyrighted materials "in a fair way."

This battle first erupted when audiocassettes were first introduced in the '70s. But when music labels realized that the cassette's audio quality degraded over time and with each subsequent generation of recording, their complaints went away. The labels also recognized quickly that cassettes actually fostered a new upsurge in music purchases as consumers created their own compilations and favorite tapes and distributed them to each other.

This is exactly what fair use is all about.

It fosters the wonderful feeling of humans sharing the experience they get from "their" music with others. How many people have wanted to share the feeling they get from the Beatles or Joni Mitchell? How many people have felt that they "understood" John Lennon or Bob Dylan and wanted to share that understanding with their friends? This sort of sharing is exactly the sort of human-to-human stuff that music execs don't understand. This is exactly the issue that 30 million Napster users were aghast at when the music labels shut down Napster.

Now the music industry has 30 million enemies.

Getting back to our historical recollections, after audiocassettes, there were VCRs. In the '80s, movie studios complained that videotape recorders would "steal" their copyrighted materials. However, it was quickly realized that VCRs actually increased the market for movies and the studios, which saw their profits double with sales of prerecorded videotapes. The fact that VCRs were analog devices just kept this inevitable conflict over fair use at bay.

The first victory of the music labels over digital technology was with something called DAT. The labels successfully had this early digital audio technology relegated to professional markets, insisting that the digital copying of music that DAT would enable would put them out of business. Minidisk was another technology and attempt at bringing digital audio technology to the masses. But it was not until MP3 that a format, technology and channel of distribution would appear that would really give the labels a scare.

And we all know what happened to Napster.

So here we are with a new generation of peer-to-peer services that are being sued by the RIAA--with the music industry readying to offer consumers pay-per-listen services like MusicNet and PressPlay. However, if you look into the details of how these services will work, it quickly becomes apparent that any former concept of "fair use" has been thrown out. What's becoming clear is that--from the labels' point of view--they think it's time to print up money without having to spend anything on costs of goods, physical distribution or warehousing.

However, one of the terms of the MusicNet license is that as long as you continue to pay your monthly fee, you get to keep those songs you've downloaded. But if you at any time stop paying your monthly service fee, then those songs, which you've rightly paid for already, will stop working. This is going too far. This is in direct violation of the copyright fair use clause.

The same thing is happening with the Replay injunction that the movie studios are attempting to instill upon Sonicblue. They claim that Replay's "Send Show" feature will start another P2P Napster-like stampede of copying and illegal distribution. However, Replay's "Send Show" feature, which none of us will really know about until we actually get our Replays, claims to limit the feature to only friends you know--and a maximum of 15 copies.

If this is true, then the movie studios have no right to try and place an injunction on Sonicblue. This is exactly what the "fair use" clause is all about. I shouldn't be able to take music and give it away to millions of people who I don't know, but it certainly seems fair for me to send my friends and family a copy of my favorite "Sex in the City" or "Sopranos" episode or the entire "Band of Brothers" series.