Rio Grande: The MP3 Showdown at High Noon in Cyberspace

As the new millennium dawns, a battle is shaping up in cyberspace that will likely redefine the manner in which many people obtain copies of their favorite music. In one corner stands the record and music industry, seeking to protect their current distribution channels and to control the dissemination of their intellectual property over the Internet. In the other corner, a group consisting of Internet mavens, some musical artists, including acts ranging from independent bands to well-established headliners, and the ever present cyberpirates stand ready to exploit the Net as a means to quickly and cheaply (i.e. at low or no cost) distribute and download songs. The development of compressed music files is the catalyst for this struggle over the use of the Internet to distribute songs.

Our society increasingly accepts and values the Internet as an integral part of everyday life. For example, the nation's use of the Internet has grown significantly in the past year alone. An astonishing forty-six percent of the estimated 74 million American Internet users began their use within the past twelve months.(1) As a consequence, more people than ever are turning to the Internet to shop, gather news, socialize, and play. Currently, the two most popular uses for the Internet are email and shopping.(2)

In connection with the increased general use of the Internet, musical artists and consumers have turned to the Net as a means to distribute songs. The Internet provides artists with another avenue to disseminate their works while also enabling consumers to sample various recordings with ease. The availability of data compression formats such as MP3 files enables web surfers to both upload and download music files with an efficiency that was heretofore unheard of. In fact, a recent survey indicates that the ability of consumers to gain ready access to music files via the Internet may ultimately transform the manner in which the entire music industry operates.(3) Unfortunately, although many of the files available on-line are copies authorized by the artists, there are also a large number of pirated files that users post without the artists' permission.(4)

This paper addresses the current controversy over the distribution of unauthorized digital music files over the Internet. The recent introduction of the Rio(5), essentially a Walkman for MP3 digital music files, and the record industry's efforts to prevent the sale of the Rio raise the issue of whether today's federal copyright framework(6) is sufficient to protect copyright owners, in this case the music industry, from piracy on the Net. Part I of this paper provides background information on the current use of the Internet to distribute music files and a brief analysis of how unauthorized music files violate a copyright owner's fundamental rights under the Copyright Act of 1976. Part II provides the technical background necessary to understand the technology at issue, namely the MP3 format and the Rio MP3 player, and introduces the litigation between a record industry group and Diamond Multimedia, the manufacturer of the Rio, over Diamond's right to market and distribute the Rio. Part III presents an analysis of the current copyright law as it pertains to the distribution of digital music over the Net. This section of the paper includes an analysis of the Audio Home Recording Act of 1992 which formed the basis for the record industry's recent action against Diamond Multimedia and a critique of the decision in the Rio case based on an analysis of the Audio Home Recording Act. Part III additionally examines the recently enacted Digital Millennium Copyright Act to determine whether the Act contains adequate protections for copyright owners' rights in cyberspace. Part IV contains proposals for measures that Congress, the record industry, and musical artists may consider in order to further the protection of musical copyrights on the information superhighway. This article concludes that while technological innovations such as the Rio and MP3 technology may have rendered the amendments to the copyright statute contained in the Audio Home Recording Act obsolete, the new Digital Millennium Copyright Act represents significant progress in furthering the protection of copyrights on the Internet and in today's digital world. The Digital Millennium Copyright Act provides a framework of information regulation that should discourage piracy of music files over the Internet. Moreover, perhaps the best course of action for the music industry is to join the Internet music revolution and concentrate its efforts on distributing digital music files rather than trying to regulate MP3 files and devices such as the Rio.

A. Waves of Music Flowing Across the World Wide Web

Given the extraordinary growth in Internet use, it is hardly surprising that many recording artists utilize the Net as a means to promote their music. Hailing cyberspace as an alternative to conventional distribution through record labels, Public Enemy recently posted an audio file of their latest song on their web site, making it available for anyone to download free of charge.(7) By using the Net to reach their audience, Chuck D, the lead singer/rapper of Public Enemy, hopes to eliminate what he perceives as the distractions and burdens inherent in dealing with the record industry and to possibly increase the amount of work that reaches the public.(8) Like Public Enemy, the Beastie Boys also ventured into cyberspace in order to promote their music. In August 1998, the Beastie Boys posted several of their songs on their official web site.(9) Although allowing their fans to download the songs at no charge, the Beasties shrewdly required anyone downloading the files to enter their email address. As a result, the band collected over 100,000 email addresses that they hope will provide a valuable marketing resource.(10) Posting songs on the Internet is not limited to rap artists. Sometime punk rocker Billy Idol also released some of his works on the MP3.com(11) site for on-line distribution.(12) Mainstream artists have also agreed to distribute some of their songs through the MP3.com site. Alanis Morissette recently posted several performances from her recent tour on the site for free downloading.(13)

While many high profile artists actively post their works on the Internet, less known artists are the ones most likely to benefit from such exposure. A local band, such as Dallas-area rock band River Crossing, is able to gain access to a much wider audience through cyberspace than would otherwise be possible.(14) Moreover, unlike popular artists, the average musician earns more from live performances than from record sales.(15) Consequently, distributing its music to as wide an audience as possible, in order to generate positive buzz, may be more important to a small band than worrying about any lost royalties as a result of giving away its songs.(16) The previously discussed MP3.com site contains many releases from smaller, independent acts such as Lucas, 790 Robot Head, and Ron Sunshine & Full Swing.(17)

Unfortunately, not all of the music files posted on the Internet are authorized by the artists. Due to the immediately accessible nature of the Internet, some on-line pirates are able to post copies of songs that the artists have not even commercially released. One example of this sort of piracy involved U2's release of its POP album in 1996. Before the record companies were able to put POP on store shelves, some crafty computer hackers apparently obtained copies of the songs from the recording studio and posted them on the Web for anyone to download free of charge.(18) More recently, a cyberpirate posted one dozen new, unreleased songs from rap artist Nas.(19) Nas intended to include those songs on an upcoming, unreleased album.(20) Since the Internet is not defined by international boundaries, the problem of unauthorized postings of music files is also not isolated to the United States. For example, in 1997, Art Music France and Warner Chappell France successfully sued a student at the Ecole National Superieure Des Telecommunications for copyright infringement.(21) The student digitized and posted, without authorization, several musical works to the web site he maintained on his school's student server.(22) Compounding this problem of cyberpiracy is that the population of Internet users who download unauthorized music files may not be limited to the stereotypical software hacker.(23) The surfers who trade in unauthorized music may include people not ordinarily viewed as hackers, including medical students, high school athletes, and teenage girls.(24)

As of December 1998, estimates of the number of songs in the MP3 format, currently the most popular format for digital music files, available for downloading over the Internet ranged from 20,000(25) to over 150,000.(26) So where exactly would a web surfer look for these song files? A good place to start exploring the on-line world of music files is to visit one of the sites dedicated to distributing music files such as MP3s. The MP3.com site boasts a wide selection of music files ranging from alternative to traditional that are available for downloading.(27) Additionally, there are search engines dedicated to finding sound files. The Mediafind site allows a user to search for a wide variety of sound files including the popular MP3 format and older formats such as AVI.(28) Of course, a user could also use a traditional search engine to track down digital music. A recent search for "music files" on Yahoo! resulted in 1087 site matches. A similar search on Infoseek returned an astonishing number of 25,322,593 results.(29)

In a recent development that promises to make MP3 files even more accessible to the average Internet user, Lycos, one of the major on-line search engines, launched a service dedicated to providing links to over 500,000 on-line songs.(30) Interestingly, Lycos chose to not distinguish between legal and illegal MP3 files since Lycos is merely providing links to other sites and is not maintaining its own database of files.(31) It should be noted that Lycos may not be entirely correct in its assumption that it will not be subject to liability for copyright infringement by merely providing links to other sites. In particular, an argument could be made that, by providing links to unauthorized files, Lycos is committing vicarious or contributory infringement by encouraging or assisting a third party to infringe a copyright.(32) Also, the newly enacted Digital Millennium Copyright Act, discussed in Part III.B, provides a safe harbor for providers who unknowingly provide links to unauthorized files.(33) However, this safe harbor limits protection to those providers who possess neither actual nor constructive knowledge that the links at issue point to infringing works and those providers who eliminate the links once they receive such notice.(34)

On the other hand, persuasive arguments could be made that search engines such as Lycos should be protected from vicarious copyright infringement through the application of the fair use doctrine. Section 107 of the Copyright Act provides an affirmative defense from copyright infringement based on fair use of the property at issue.(35) In deciding whether fair use applies in a given situation, section 107 lists a number of factors that courts should weigh.(36) Based on these factors, a credible position could be taken that search engines should be entitled to the fair use defense from copyright infringement. For example, a search engine that merely provides links to other sites ultimately helps users find authorized files, thereby causing a beneficial effect on the potential market for that work. Of course, a counterpoint to that argument is that, by pointing users to illegal sites, search engines may detrimentally affect the market for copyrighted works contained on those illegal sites. Nevertheless, copyright owners could still use these search engines to facilitate their policing of the Internet for unauthorized copies of their property.(37)

After the initial announcement of its new search engine, Lycos maintained its original position that it would not distinguish between legal or illegal files.(38) In an apparent concession to industry outcries, however, Lycos added that it would remove links to illegal materials after being notified by the record industry and other copyright owners.(39) Nevertheless, this venture by Lycos could prove to be a significant blow to the recording industry's current efforts to police and protect their copyrights by providing Internet users with easier access to unauthorized music files. Additionally, while many of the music files posted in cyberspace are authorized by the artists, such as the files posted by Public Enemy, the Beastie Boys, Billy Idol, and Alanis Morissette among others, it is estimated that the majority of the songs posted on the Internet are unauthorized, including the previously discussed U2 and Nas situations.(40)

B. Traditional Copyright Protection: "Why Can't I Post Copies of My Favorite CD For the World to Download?"

To understand the legal ramifications of disseminating digital music files over the Internet, the general backbone of the copyright law in the United States should be discussed. Not surprisingly, copyright law has its genesis in the U.S. Constitution. The Constitution grants Congress the power to provide authors with exclusive rights over their works in order to promote the advancement of intellectual creations.(41) Accordingly, Congress passed several federal copyright acts in attempts to apply these Constitutional powers.(42) Congress' first attempt at a copyright law was the Copyright Act of 1790.(43) Interestingly, Congress limited copyright protection under the 1790 Act to books.(44) Of course, subsequent amendments to the copyright statute broadened its scope to include musical compositions, among other works.(45) In 1909, Congress passed the first major overhaul of the copyright laws, significantly broadening the works protected by copyrights to include "all writings", works in progress, and speeches, and extending the duration of copyright terms.(46) Then, in 1976, Congress enacted what is currently the backbone of the U.S. copyright system.(47)

Under the Copyright Act of 1976, Congress granted copyright owners a bundle of valuable rights in regards to their work. The traditional exclusive rights that copyright owners possess include the right to reproduce the work, the right to prepare derivative works, the right to distribute copies of the work, and the right to perform the work publicly.(48) In 1995, Congress also added the right to perform sound recordings by means of a digital audio transmission to this bundle of rights.(49), (50) Anyone who violates any of a copyright owner's exclusive rights is considered an infringer of the copyright.(51)

The most obvious exclusive rights that unauthorized posters of digital music files violate are the rights that copyright owners have to copy their works(52), to distribute copies of their work(53), and the right to perform sound recordings by means of a digital audio transmission.(54) In regards to the right to perform sound recordings by means of a digital audio transmission, cyberpirates may argue that merely placing files on their servers is not a "transmission." However, Congress intended the digital audio transmission right to encompass the electronic delivery of copies of sound recordings.(55) This would include the delivery of music files to a web server.

Additionally, it should be noted that the Copyright Act actually places an important limit on a copyright owner's distribution right. Section 109(a) of the Act states that the owner of a particular phonorecord is entitled to dispose of that copy.(56) Under this part of the statute, commonly referred to as the "first sale doctrine,"(57) consumers may resell a compact disc, to a used record store for example, without violating the artist's right of distribution. Unfortunately for those Internet users who desire to freely upload and download music files, the "first sale doctrine" does protect consumers who, without authorization from the artist, post files that they made from their own compact discs onto the Internet. The "first sale doctrine" only protects subsequent transfers of the actual physical copy of the original compact disc.(58) The "first sale doctrine" does not provide a safe harbor for cyberpirates who deal in unauthorized music files. As a result, users who unlawfully post copies of their favorite songs on the Internet violate those respective artists' exclusive rights to copy and to distribute copies of their copyrighted material.

As the preceding discussion reveals, it is clearly a violation of copyright laws to post copies of someone else's music on to the Internet without the artist's authorization. Although these unauthorized postings pose a problem for the recording industry, a much more serious issue for the industry is the emergence of devices that consumers may use for the remote playback of music files. These devices have the potential to broaden the audience for MP3 files to include general consumers rather than just sophisticated computer hobbyists. Consequently, one pressing issue is whether the government can, and in what manner, regulate digital music listening devices such as the newly introduced Rio MP3 player in order to effectively protect recording artists' copyrighted material. An ancillary issue that should also be addressed is which tactic the record industry should implement in order to best protect its intellectual property in the face of the increasing use of the Internet to distribute music.

A. The MP3 Downloading Phenomenon

In searching for on-line music files, an Internet user will inevitably find that many of the posted files are in a MP3 format. Although sound files such as AVIs and WAVs have been around for some time, it was the advent of the MP3 format that substantially increased the availability of music on the Internet.(59) After its introduction, MP3 quickly became the most popular audio compression format on the Internet.(60) According to record industry representatives, "After the word sex, MP3 is now the most common entry used to search for Web sites on the Internet."(61) Even software giant Microsoft recognized that the MP3 format is quickly becoming the de facto standard for digital music files and designed their Media Player to be MP3 compatible.(62) As a consequence, Windows users are now able to play MP3 files without any extra software.

MP3 is an abbreviation for Motion Picture Experts Group (MPEG) 1 layer 3.(63) Using the MP3 format, a user is able to compress audio-visual information into a digital format that occupies much less memory space than previous technology.(64) The MP3 format makes these space savings possible by reducing the original sound data by a factor of twelve.(65) Normally, a five minute song requires about 50 megabytes of storage space.(66) Using the MP3 format, a user can compress the same song into a space of only about 5 megabytes.(67) The developers of MP3 claim that, while the space efficiencies are substantial, the original sound quality is maintained.(68) Moreover, since the MP3 files are digital, they result in perfect copies of the original source.(69) In the past, copies of music on the Internet were subpar when compared to CDs. As a result, there was a perception amongst audiophiles that record companies were willing to forego legal action in some cases due to the lower quality of the files available.(70) Due to the quality of MP3 files, however, record companies are no longer taking a passive stance in regards to the distribution of on-line music files. The exceptional quality of MP3 copies is apparently the catalyst for the recent actions by the record industry to stop the Rio player and to establish a secure Internet format for distributing music.(71)

Exacerbating the recording industry's current woes is that the MP3 format also does not support any manner of copyright protection or encryption technology.(72) As a consequence, since many personal computer systems include CD-ROM players as standard equipment, it is a relatively simple task for average computer users to create, maintain, and upload their own MP3 copies of songs from music CDs they purchased.(73) Anyone inclined to make MP3 music files would merely need to download an MP3 player program and use it to convert individual tracks from a CD into MP3 files, a process called "ripping."(74), (75) Users could then upload the files to their servers, making them available to anyone with Internet access to download.(76) Not surprisingly, college students led the way in posting MP3 files onto the Internet. The majority of college students have easy access to fast Internet connections through their schools' networks.(77) Moreover, many students with shoestring budgets apparently welcome the opportunity to download copies of songs from their favorite artists for free or at very little cost.(78)

B. Diamond Multimedia's Rio Player

In October 1998, Diamond Multimedia Systems Inc. planned to launch a portable MP3 playing device that the recording industry vigorously opposed.(79) As a result of Diamond Multimedia's device, officially called the Rio PMP 300, the Recording Industry Association of America filed an action seeking to prevent the sale of the device. That action sparked this discussion regarding what steps should be taken in order to protect copyright rights in the face of the Internet music explosion. Before proceeding, it would be beneficial to understand exactly what the Rio player is and why the recording industry perceives it as such a dangerous threat to their business.

According to Diamond Multimedia, their Rio player is the first portable MP3 player retailing for under $200 that is capable of storing sixty minutes of music.(80) While there have been other portable MP3 players on the market prior to the Rio, the Rio costs less and contains more features than its predecessors.(81) Diamond Multimedia claims that the Rio is capable of operating for twelve hours using only one AA battery.(82) The Rio is extremely compact with no moving parts and dimensions that are smaller than an audio cassette tape.(83) Since the Rio contains no moving parts, it does not skip during playback and is seen as an attractive alternative to portable CD players.(84) Rather than keeping data on traditional media such as tapes, the Rio utilizes flash memory to maintain any files that users download into it.(85) Additionally, the Rio accepts removable memory cards that increase the storage capacity of the unit.(86) While Diamond Multimedia disputes that the Rio could be used as a recording device, there has been speculation that a Rio user could record music onto one of these removable cards and then give that card to another user.(87) Regardless of the technical feasibility of transferring cards from device to device, there is probably no danger of that type of use becoming widespread since the memory cards currently retail for $50.(88) Diamond Multimedia also ships with the player a program that consumers can use to convert CDs into MP3 files.(89) Given the relative ease with which Rio owners could make MP3 files from their CDs, and presumably download compatible files from the Internet, the record industry is apparently concerned that their copyrights and their ability to collect royalties would be irreparably harmed.

C. The Record Empire Strikes Back: Recording Industry Ass'n of America, Inc. v. Diamond Multimedia Systems, Inc.

The struggle to control digitized music over the Internet recently reached the federal courts when a record industry trade association sought to enjoin the sale of the Rio player.(90) In Recording Industry Ass'n of America, Inc. v. Diamond Multimedia Systems, Inc., 49 U.S.P.Q.2d 1024 (C.D. Cal. 1998), the Recording Industry Association of America (RIAA) attempted to preliminarily enjoin Diamond Multimedia from distributing their Rio player based on allegations that the Rio violated the Audio Home Recording Act of 1992. Based on a detailed analysis of Diamond Multimedia's alleged Audio Home Recording Act violations, Judge Collins decided that, while the Rio could technically fall under the jurisdiction of the Audio Home Recording Act, the RIAA did not demonstrate a probability of success in establishing Diamond Multimedia's liability under the Act.(91) Consequently, she denied RIAA's request for an injunction against the distribution and sale of the Rio player.(92) In November 1998, the RIAA appealed Judge Collins's decision.(93)

Although the dispute between the RIAA and Diamond Multimedia has been a source of substantial publicity, it should be noted that the immediate controversy concerning the Rio player may have a limited short-term impact. For example, Diamond Multimedia apparently joined a record industry coalition dedicated to establishing a standard means of controlling the proliferation of digitized music over the Internet.(94) Moreover, there is no guarantee that the MP3 format itself will not be supplanted by a different format or technology in the future. In a larger context, however, the policy questions still remain in regards to what type of regulations should exist regarding the distribution of on-line music and the extent of any such regulations. Consequently, although the current battle between the RIAA and Diamond Multimedia over the Rio may be nearing a conclusion, the long term policy question of how music files and related intellectual property on the Internet should be regulated remain and will be discussed later in this paper.

A. The Audio Home Recording Act of 1992 and the Rio Case

The Audio Home Recording Act (AHRA) must be analyzed for two primary reasons. First, the AHRA must be understood in order to evaluate whether Judge Collins was correct in denying the RIAA's request for injunctive relief. As previously discussed, Judge Collins determined that, for the purposes of injunctive relief, the RIAA had not proven a likelihood of success under the AHRA.(95) More important, perhaps, is to determine whether or not the AHRA provides an effective means of controlling devices, such as the Rio, that have the capability to eviscerate many copyright protections.

Manufacturers first introduced digital audio tapes (DATs) in 1986.(96) Many music industry observers at that time assumed that the DAT would eventually replace the traditional audio cassette.(97) The DAT was essentially a cassette tape capable of delivering the music quality of a CD.(98) Interestingly, the recording industry's resistance to the DAT in the late 1980's and early 1990's bears a striking resemblance to the current situation regarding portable MP3 players. As with the present debate over Rio-type devices, the record industry expressed concerns regarding the DAT recorder's ability to make perfect copies of commercial music products.(99) Also, again paralleling today's debate, the music industry threatened that there would be a decrease in demand for commercial music due to the increased amount of "perfect" illegal copies of the same material as a result of DATs.(100) However, one significant difference between the current battle over portable MP3 players and the previous battle over DAT players is that, with DATs, the recording industry was able to successfully forestall the introduction of DAT recorders into the United States market through threats of legal action.(101) With the current Rio situation, on the other hand, the RIAA failed in its initial attempt to prevent the introduction of the Rio.

At the same time that they threatened legal action against potential marketers and distributors of DAT recorders in the United States market, the members of the music recording industry sought legislation that would protect their copyrights in the face of the emerging technology.(102) Congress finally addressed the copyright issues that devices such as DAT players presented by passing the Audio Home Recording Act of 1992. Congress's express purpose in enacting the AHRA was "to create the necessary legal environment for the digital audio tape (DAT) technology to be introduced into the commercial marketplace in the United States."(103) When President George Bush signed the AHRA, he hoped that the legislation would ensure that consumers would have access to the new digital audio recording technology while at the same time protecting the legitimate rights of the recording industry through a royalty scheme(104) and a system to prevent uninhibited recording of digital audio tapes(105), (106).

Ironically, the DAT never became the success that most music industry observers assumed that it would.(107) While the DAT became the standard for professional recording studios, the mainstream consumer public never really accepted the technology.(108) Factors that possibly contributed to the demise of the DAT include the relatively high cost of the equipment and tapes and a general reluctance by consumers to replace their old audio cassette tapes.(109) The motivating factor behind the passage of the AHRA, the DAT, no longer poses an imminent threat to copyright protection. Nevertheless, the AHRA itself could still possibly provide a means of protecting copyrights in the face of the new technology presented by the portable MP3 players since Congress drafted the AHRA to encompass "digital audio recording devices."(110) More specifically, Congress did not expressly limit the AHRA's jurisdiction to DATs.(111)

To prevent consumers from making perfect digital copies of musical works, Congress banned the importation, manufacture, or distribution of any digital audio recording device that does not conform to a serial copy(112) management system.(113) In the AHRA, Congress defined a "digital recording device" as a device that has a digital recording function primarily designed for making a digital audio copied recording.(114) A "digital audio copied recording" is a reproduction made from a digital musical recording or from a transmission.(115)

a. But Does the AHRA Encompass the Rio Device? For the AHRA's requirements regarding the implementation of copying controls to apply to Rio-type devices, these new devices must fit within Congress's definition of a "digital recording device." If read literally, it is not readily apparent that the Rio qualifies as a "digital recording device" under the AHRA. The Rio does not have any type of recording function in the traditional sense. For instance, it does not contain any mechanism to make physical copies of a recording in the manner that a DAT or an audio cassette deck makes copied tapes. The AHRA, however, specifically defines a "digital recording device" as having a recording function. Consequently, if both the AHRA and portable MP3 players are interpreted at face value, the MP3 players would probably not fit under the purview of the AHRA since they are more properly characterized as digital playback devices rather than digital recording devices.

Nevertheless, a creative litigator could argue that the AHRA's definition of a "digital recording device" encompasses portable MP3 players. Although portable MP3 players do not have the ability to record onto physical media such as tapes, they store copies of the music files that will eventually be played back onto memory chips. For example, the Rio stores copies of music files on flash memory that is either contained in the device itself or on flash memory cards that a consumer can purchase as an accessory.(116) An advocate could possibly argue that, by storing a copy of an MP3 file in flash memory, a Rio player is a digital recording device since it is, in a sense, recording a file onto memory. Support for this line of argument is evidenced in cases in which the courts held that a computer program loaded into memory is actually a copy of the original program for copyright purposes.(117) Also, Congress arguably accepted this rationale since it passed an amendment to the Copyright Act in 1997 that specifically authorized computer users to make these RAM copies in certain circumstances without violating the copyright laws.(118) Therefore, an argument could be made that by loading a MP3 file, a portable MP3 player is actually "recording" that file into memory. If this process is considered to represent a portable MP3 player's recording function, then the AHRA would apply to the device.

Upon reflection, based on the portable MP3 players' lack of a true recording function, it would appear that the best interpretation of the AHRA is to not include portable MP3 players within the statutory definition of "digital audio recording device". Other definitions in the AHRA seemingly indicate that Congress meant to address recording devices that actually recorded onto a medium. The AHRA defines a "digital audio recording medium" as "any material object in a form commonly distributed for use by individuals ... that is ... used by consumers for ... making ... recordings."(119) This definition apparently includes items such as tapes but does not appear to encompass the flash memory that the Rio arguably uses to record. The primary or most common use for the flash memory of the Rio, both onboard and add-on cards, is not to make digital audio copied recordings. Rather, the flash memory is essential to the operation of the Rio and is used to store a temporary copy of a MP3 file for the Rio to read during playback. Diamond Multimedia also intended the add-on cards to increase the amount of music that the Rio could playback at any one time. Moreover, other portions of the AHRA's definition of "digital audio recording device" also indicate that Congress meant to target machines with traditional recording functions. For example, Congress specifically excluded dictation machines and answering machines from the definition of "digital audio recording device."(120) This is further evidence that Congress targeted devices with specific recording operations since Congress felt that it was necessary to provide exemptions for certain machines that contained true recording functions. Consequently, while an argument could be made that the storage of a MP3 file in the Rio's flash memory is a recording function, it is more likely that Congress actually envisioned a recording function in the traditional sense, such as writing data onto a medium such as a tape, when it defined a "digital audio recording device."

Another theory to bring portable MP3 players within the purview of the AHRA is witnessed in the recent Rio case. In her opinion in Recording Industry Ass'n of America, Inc. v. Diamond Multimedia Systems, Inc., Judge Collins decided that the Rio MP3 player was covered by the AHRA based partly on the legislative history of the Act.(121) Judge Collins reasoned that the legislature did not intend to remove a device from the purview of the AHRA merely because it lacked a completely independent recording function.(122) First, Judge Collins noted that the phrase "recording function" was included in the definition of a digital recording device only to ensure that just the audio recording function of a device capable of both audio and video recording was scrutinized under the AHRA.(123) Additionally, allowing a device capable of making digital audio reproductions to escape the requirements of the AHRA merely because it was not capable of truly independent recording would "undermine the entire statutory scheme."(124) Consequently, Judge Collins's interpretation of the legislative history of the AHRA would place portable MP3 players within the jurisdiction of the AHRA.

In her analysis, Judge Collins dismissed as insignificant a reference in the legislative history regarding devices with independent recording functions.(125) However, it is not completely clear that the reference should be disregarded in light of the previous discussion of the plain wording of the statute. The legislative history at issue reads:

Based on the preceding passage, it would appear that the legislators would only consider peripherals such as the Rio to be digital audio recording devices if they contained independent recording functions and were designed or marketed to make copied recordings. Portable MP3 players contain neither independent recording functions nor are designed to make copied records. Rather, as previously discussed, Rio devices are designed merely to playback files that are downloaded into their memory from a computer. When this passage is viewed in conjunction with definitions from the AHRA that seem to indicate that the legislators drafted the Act to target machines that recorded onto some type of media, it would appear that Judge Collins may not have been entirely justified in dismissing this part of the legislative history. Although Judge Collins argues to the contrary, the legislative history of the AHRA provides evidence that Congress meant to address only those devices that contained a true independent recording function such as the DAT recorders that were the initial catalysts for the Act.

It is not at all clear whether the AHRA can be applied to Rio devices. Arguments could be made that the AHRA does actually encompass these portable MP3 players based on the copying of MP3s into the players' flash memory and on one interpretation of the legislative history. However, the better interpretation of the statute, based on both a reading of the legislative history that differs from that used by Judge Collins and on the plain language of the Act itself, seems to indicate that a portable MP3 player would not be covered by the AHRA.

b. A Copy Protection Scheme Would be Ineffective in Any Event. Even if, for argument's sake, Rio-type players are included within the jurisdiction of the AHRA, it is debatable whether the copy protection scheme mandated by the AHRA would be effective when applied to these devices. As previously discussed in Part III.A.3, the AHRA mandates that digital audio recording devices contain some type of copy management system to restrict serial copying of digital music recordings.(127) However, devices such as the Rio merely download files from a computer into its memory. Consequently, the Rio is only capable of loading and playing files that consumers already copied and placed onto their computers' hard drives. These portable MP3 players do not contain any sort of mechanism by which they could independently make copies of the downloaded files for use in other player devices. Accordingly, even if the Rio contained a serial copy management system, the system would be the equivalent of the human vestigial tail: the copy management system would be present in the device but would serve no useful function. The Rio already prevents unfettered serial copying of digital audio recordings since it is inherently unable to serially record files. In the recent Rio case, Judge Collins based part of her denial of RIAA's request for injunctive relief on these facts.(128) Since the AHRA's requirement of a serial copy management system would prove useless on a portable MP3 player such as the Rio, it would appear that the AHRA is an ineffective means of preventing consumers from making unauthorized copies of digital audio files such as MP3s or of controlling portable MP3 players.

Notwithstanding the problems regarding whether the AHRA applies to Rio-like devices and the ubiquitous nature of a copy management system if Rio devices were required to include such a system, the AHRA, as currently written, will never eliminate the Rio devices from the market. The Act contains a fair use provision that limits liability in two key respects.(129) First, a court may not hold a party liable for copyright infringement merely by that party's manufacturing or distributing of a digital audio recording device.(130) The civil remedies available are limited to the damages that Congress specified in the AHRA.(131) Moreover, the Act apparently precludes contributory infringement actions against the digital audio recorder manufacturers.

Additionally, the Act permits a consumer to make digital recordings using a covered device so long as the recordings are for noncommercial use.(132) The statute also does not specify that the recordings must be made from a legally obtained copy of the original work.(133) As a consequence, web surfers could arguably download a MP3 file from the Internet, whether or not it is an authorized copy, and play it back on their Rios without violating the AHRA. Although the person who originally posts an unauthorized MP3 violates the copyrights laws, it would appear that users who download one of these files for personal use on their Rios would fall under the AHRA's exemption for noncommercial fair use.

Congress apparently included this fair use provision as a trade off for a royalty scheme imposed by Congress in the AHRA.(134) Under the AHRA, a royalty is imposed on the sale of both digital audio recording devices and the recording media used in those devices.(135) These royalties are deposited into funds that are set up by the Act.(136) The Act also provides a procedure for distributing the royalty payments to the interested copyright parties.(137) As a result of the AHRA's royalty scheme, the recording industry is not left without compensation, notwithstanding the fair use exceptions for noncommercial use. In the case of the Rio players, however, the royalty compensation to the music industry would not be as substantial as with traditional recording devices since Rio users do not need to purchase any type of recording medium to use their Rios. For example, MP3 files are downloaded into the player's internal memory by default. The record industry would probably only collect royalties from the sales of the Rio devices rather than from the sales of both devices and media. Therefore, if the current provisions of the AHRA are applied to portable MP3 players, the fair use exemptions would severely limit copyright infringement liability for both the manufacturers and the users of the devices while the music industry would not receive the full benefits of the royalty provisions of the Act.

In its current state, the AHRA is not an entirely effective means of protecting the copyrights of the record industry from portable MP3 devices. Congress drafted the AHRA in a manner that could leave the new portable MP3 players outside of its jurisdiction. Even if the AHRA is interpreted to encompass the portable MP3 devices, the copy protection scheme mandated by the Act would not be effective given the nature of the portable MP3 players. The AHRA also includes fair use and royalty provisions that further limit its effectiveness when applied to Rio-like players. Therefore, it would seem that the new portable MP3 players render the AHRA obsolete although the Act is still appropriate legislation to address the concerns raised by the DAT and devices similar to the DAT.

A recent development in cyberspace underscores the need to either modify the AHRA or to institute a different method of protecting copyrights from devices such as the Rio. The Rio, as it is manufactured and distributed by Diamond Multimedia Systems, is incapable of transferring the files stored in its internal memory to another computer or device since it is shipped with no digital output capability.(138) However, computer programmers recently reverse-engineered the application that Diamond Multimedia includes with the Rio for downloading files into the device and modified the code to enable the program to upload files to a PC.(139) This modified program theoretically allows consumers to download MP3 files into their Rios, connect their Rios to a different computer, upload the files into that computer, and use that computer to make CD copies of the MP3 through the use of a CD recorder. The modified program, in effect, allows the Rio to produce digital output notwithstanding the fact that the Rio, as shipped by Diamond Multimedia, is unable to function in that manner. Consequently, it would appear that a device that is not clearly within the jurisdiction of the AHRA may now be modified to act, in conjunction with another computer with a CD recorder, in the very manner that Congress hoped to control through the AHRA. Technology seems to have made the AHRA obsolete or, at the very least, in need of serious amendment and improvement.

B. A New Hope: The Digital Millennium Copyright Act

The AHRA is probably not the solution for the copyright problems that the recording industry faces when it comes to on-line music and devices such as the Rio. However, President Bill Clinton recently signed into law a new act that promises to balance the interests of both copyright owners and consumers in regards to the Internet.(140) For the purposes of this discussion regarding the threat of Rio-type devices on copyrights, the two most important aspects of the Digital Millennium Copyright Act of 1998 (DMCA) were the implementation of two World Intellectual Property Organization (WIPO) treaties regarding copyright protection measures and the establishment of provisions limiting copyright infringement liability for Internet service providers (ISPs).(141) Congress did not draft the DMCA with the express purpose of directly limiting the use of Rio-type devices for playing unauthorized music files. However, the DMCA should ultimately discourage piracy on the Internet.

Title I of the DMCA, subtitled the "WIPO Treaties Implementation Act", protects technological measures used by copyright owners to protect their works on the Internet.(142) The Act prohibits users from circumventing "a technological measure that effectively controls access to" copyrighted material.(143)

The DMCA's prohibition on circumventing technological measures designed to protect copyrighted material will probably have little practical effect on a device such as the Rio. As previously discussed in the analysis of the AHRA, supra discussion Part III.A.3.b, the nature of the Rio is such that copy management systems are ineffective to control any unauthorized reproduction of copyrighted works. The Rio is designed to download files from a computer into its onboard memory for playback. It is not designed to make copies of these works and, accordingly, has no independent recording function. Therefore, it is unlikely that the manufacturers of Rio-like devices will equip them with copy management systems. If there are no copy management systems on these machines, there will obviously be no way for a user to violate the DMCA's prohibition on the circumvention of such systems.

Moreover, the Rio does not fit under the Act's definition of devices that are prohibited by the anti-circumvention provisions. Under section 1201, the DMCA defines these devices as those devices primarily designed to circumvent technological control measures or devices that have little use outside of circumventing copyright controls.(144) In fact, Congress acknowledged that they did not intend this section to apply to products, such as the Rio, that are capable of commercially significant noninfringing uses.(145) Examples of the products that Congress did not intend to include under the anti-circumvention provisions are videocassette recorders, telecommunications switches, personal computers, servers, and other consumer electronics and computer products.(146) The Rio seemingly fits within these categories of devices. Additionally, Congress intended for this section to "outlaw so-called 'black boxes' that are expressly intended to facilitate circumvention of technological protection measures for purposes of gaining access to a work."(147) Again, the Rio and related portable MP3 playback devices are more akin to mainstream consumer products than to "black box" machines designed to pirate protected works. Based on an evaluation of the legislative reports regarding the passage of the DMCA, it is unlikely that Congress would have considered portable MP3 playback machines as devices that would be prohibited by the Act.

While the anti-circumvention provisions of the DMCA will probably not prevent Rio users from listening to unauthorized MP3 files, the DMCA's limitations on Internet service provider (ISP) liability for copyright infringement appear much more promising as safeguards against on-line piracy. Title II of the DMCA, titled the "On-Line Copyright Infringement Liability Limitation Act", addresses the concerns of ISPs regarding their possible liability for infringing material that consumers transmit using the ISPs' services.(148) The Act provides a safe harbor for ISPs from copyright infringement liability when a user transmits unauthorized materials over their networks if certain conditions are met by the ISP. To receive the benefit of this safe harbor, an ISP must ensure that the suspect transmission is initiated by the user and not the ISP, the ISP does not select the transmitted material, the ISP does not select the recipients of the material, the material is not stored by the ISP for a period longer than necessary for the transmission of the material, and the ISP does not modify the content of the material.(149) Furthermore, the Act provides ISPs with another safe harbor for the intermediate or temporary storage of infringing material on their networks by an end-user incident to the transmission of these infringing materials.(150) To properly invoke this "caching" safe harbor, the ISP must meet the same general conditions as those concerning the transmission safe harbor.(151) The practical result of these two limitations on liability is that qualifying ISPs cannot be liable for copyright infringement when one of their subscribers transmit infringing materials over their networks as long as the ISP meets the statutory requirements.

If viewed in isolation, the safe harbors for the transmission and caching incident to the transmission of unauthorized materials may seem counterproductive to the protection of copyrights. However, the DMCA balances these safe harbors with another limitation on liability regarding the actual storage of the infringing materials on the ISPs' networks. These safe harbors taken together have the potential to ultimately reduce Internet piracy.

Under the DMCA, an ISP cannot be liable for copyright infringement due to one of its users storing unauthorized works on its network as long as it does not have actual or constructive knowledge of the material.(152) Once an ISP becomes aware of any infringing materials stored on its network, it must act expeditiously to remove the files in order to qualify for this safe harbor.(153) The Act also requires that an ISP designate an agent to receive notification of the storage of infringing files on its service from the copyright owners and details the procedures that copyright owners must follow in notifying the ISP about any unauthorized material.(154) Due to this safe harbor, ISPs have a tremendous incentive to eliminate unauthorized material from their networks once copyright owners inform them of the presence of any illegal files.

In effect, if copyright owners wish to maintain and protect their rights, they are forced into actively policing cyberspace for potential infringers. This may prove a daunting task for some copyright owners who lack the resources to effectively monitor Internet activity. However, the record industry, which is spearheading the current movement to regulate Rio-type devices, seemingly has the resources to adequately search the Net for unauthorized files. For example, a spokesman for the RIAA recently revealed that, in just one afternoon, they discovered 80 pirate sites offering 20,000 MP3 files.(155) The anti-piracy unit of the RIAA is also currently the largest department in the association.(156), (157) The RIAA currently has the infrastructure in place to battle Internet piracy. The industry group already trains FBI agents on copyright issues, attends congressional hearings, presents on-line piracy lectures on college campuses, and employs college graduates to surf for illegal MP3s.(158) Since the record industry will directly benefit from eliminating unauthorized MP3 files from the Net, it does not seem overly burdensome to shift the responsibility for tracking down the pirate sites to the record business.

The significance of this provision of the DMCA, and the reason why the DMCA may succeed where past copyright statutes failed, is that this the DMCA is an attempt to regulate information rather than devices. This is not the same type of act as the AHRA. The AHRA was an attempt by Congress to control particular types of devices, not necessarily the information that the devices processed and used. As the current battle over the Rio demonstrates, device oriented statutes such as the AHRA run the risk of becoming obsolete due to technological innovations. This risk is less pronounced when a statute concentrates its provisions on regulating information, which is the case with the DMCA. The DMCA promises to reduce the available forums for MP3 pirates to post their files. As a result of the safe harbors contained in the DMCA, Congress gave ISPs substantial incentives to shut down these pirate sites once the ISPs receive notification of their existence on the ISPs' networks. There will probably be very few ISPs that would risk potential copyright infringement liability when they merely have to pull the plug on any pirate users on their systems. Moreover, the cost of policing the Internet is shifted to an entity that has a strong incentive to monitor cyberspace for infringers and the resources to effectively do so: the record industry. The record industry stands to gain the most from a reduction in on-line pirated works since it will directly benefit via increased sales of authorized recordings. These incentives that both the ISPs and the record industry have to act as gatekeepers of the information superhighway in regards to copyrighted material will not diminish with the introduction of new devices. The focus of the DMCA on the regulation of information is not dependent on the control of any particular device. Regardless of any technical innovations that may be introduced, the DMCA safe harbors will likely keep both the record industry and the ISPs actively involved in preventing Internet users from making unauthorized files available on-line. As a result, the DMCA will probably provide copyright protections for a longer period of time than a device related act such as the AHRA. As previously discussed, a device related act such as the AHRA is susceptible to being leapfrogged by new technology. An act like the DMCA that focuses on information regulation is more adaptable to current technological innovations and is less likely to be rendered obsolete by new inventions.

To aid copyright owners in identifying authorized and unauthorized copies of their works, the DMCA makes it illegal for a person to remove or alter any information used by a copyright owner to identify the work, the owner, or a permissible use of the work.(159) This section of the DMCA will protect copyright owners' efforts to mark their original works, in a manner that is transparent to a consumer, and enable the copyright owners to distinguish between authorized recordings and pirated copies. In order for this section to aid the record industry's cyberspace policing efforts, record companies will need to mark their musical works with some sort of digital watermark as a matter of procedure. If digital watermarking of music becomes common, it is highly probable that this provision of the DMCA will enable the music industry to more easily distinguish between authorized and unauthorized music files. As a result, this portion of the Act has the potential to help the efforts of copyright owners to detect pirated materials on the Internet.

The DMCA represents significant progress in the legislature's efforts to ensure that copyrighted material such as musical works are protected in cyberspace. Congress provides an incentive for ISPs to act as copyright gatekeepers to the information superhighway. In doing so, Congress does not require any active policing on the part of the ISPs. However, Congress made several safe harbors to copyright infringement liability available to ISPs on the condition that the ISPs act diligently after receiving notice of illicit activity by their users. Since ISPs are not required to act unless they are aware of piracy, the record industry has an incentive to actively monitor the Internet in order to identify infringers to the ISPs. The DMCA also makes monitoring efforts by copyright owners easier by prohibiting persons from altering identification information, such as digital watermarks, that the owners place on their works.

The DMCA focuses its protective measures on the monitoring of information rather than devices. This shift of focus when compared with acts such as the AHRA reduces the possibility that emerging technologies will render the measures in the DMCA obsolete. Of course, it should not be overlooked that the DMCA includes a provision that targets devices by prohibiting the circumvention of copy protection measures. However, this provision will not prove effective in protecting copyright owners from devices such as the Rio since the Rio does not currently ship with any manner of copy protection. As discussed in connection with the AHRA, a copy protection scheme on a Rio would be ineffective to protect copyrights. In regards to the MP3 phenomenon, the DMCA will not prevent on-line pirates from initially violating a musician's copyright if they are so inclined. Nevertheless, the DMCA provides an adequate framework for eliminating unauthorized postings ex post.. The Act facilitates copyright owners' efforts to monitor the Internet for illegal postings and provides incentives for ISPs to eliminate the postings once the copyright owners detect them. Consequently, the DMCA should ultimately discourage copyright piracy in cyberspace.

Although the DMCA is a step in the right direction in ensuring that copyrights are protected on the information superhighway, there is always room for improvement to our current system. In fact, the recording industry recently formed a coalition to develop security measures in order to confront unauthorized music files on the Internet.(160) Dubbed the Secure Digital Music Initiative (SDMI), the coalition hopes to create a method of delivering music over the Internet while still maintaining copyright control over the works.(161) The SDMI boasts a powerful group of members including Sony, Warner Brothers, IBM, Microsoft, America On-Line, and even Diamond Multimedia, the makers of the Rio.(162) The following are several proposals that Congress and the SDMI could consider implementing in their efforts to ensure that musicians are properly compensated for their copyrighted material.

A. Imposition of Royalties on Manufacturers of Portable MP3 Devices

One possible way to guarantee that the record industry will receive some economic compensation for their copyrighted materials is to impose a royalty scheme on portable MP3 players . This would not be a novel concept. As previously discussed in Part III.A.4, the AHRA already contains a royalty scheme that is targeted at DAT devices. Although its current incarnation does not necessarily encompass portable MP3 players such as the Rio, the legislature could easily amend the Act to provide such coverage. For example, the legislature could update the definition of "digital audio recording device" to specifically include devices without an independent recording function such as the Rio. Interestingly, Diamond Multimedia has already allegedly set aside a percentage of their sales of the Rio in anticipation that either the courts or the legislature will require them to pay royalties sometime in the future.(163)

If the legislature amends the AHRA to include Rio devices within its jurisdiction, it would ensure that music artists and the record industry are compensated in some manner with respect to the use of portable devices to playback MP3 copies of their work. However, the inclusion of Rio devices within the AHRA's royalty scheme would not produce the same level of compensation as with devices such as DATs. First, this expansion of the AHRA royalty provisions would not include all users of MP3 files. For instance, computer users do not need to purchase portable MP3 players at all to be able to listen to MP3 files. They could still download files off the Internet and play them through the speakers of their computers with the use of MP3 programs.(164) Secondly, Rio devices do not require any type of media to function. Since the AHRA imposes royalties on both the recording/playback devices and the media used with those machines, there would only be one source of income with Rio-type devices as opposed to two for a traditional digital audio recorder. As a result, imposing royalties on the Rio would not be a complete answer to Internet piracy of music files. However, it would ensure that the recording industry received some measure of compensation as far as portable MP3 players are concerned. If the portable MP3 players become a commercial success, unlike the DAT players, then the resultant royalties could add up to substantial amounts.

B. Digital Watermarking

One initiative that the SDMI is likely to adopt is to mandate digital watermarking of authorized music files sold or distributed through the Web. Liquid Audio recently introduced technology that enables artists to embed digital watermarks within digital music files including MP3s.(165) This digital mark, called the Genuine Music Mark, cannot be copied by consumers.(166) However, the presence or absence of the mark will not affect the functioning of any MP3 player.(167) The players will still be able to playback MP3 files without the watermarking.(168) The digital watermark introduced by Liquid Audio has already gained the support of a coalition of interested parties that include record labels, portable MP3 player manufacturers, software firms that make MP3 player software, and commercial MP3 web sites.(169)

It would be foolish for the record industry not to adopt some form of digital watermarking. The watermarking is transparent to consumers and will not affect the playback of the MP3s. Also, as previously discussed in Part III.B.5, the DMCA contains measures that attempt to prevent any modification or deletion of copyright identification such as watermarks. Although the record industry presumably knows which Internet sites contain authorized files, the presence of a watermark would aid the industry's policing of the Internet by providing an easy means for distinguishing between authentic and unauthorized MP3 files. This is important because the DMCA shifts the burden of monitoring the Internet to the copyright owners. Of course, watermarking will not prevent technophiles from creating unauthorized copies of MP3s. Additionally, although the DMCA provides a legal remedy for copyright owners to use against people who tamper with watermarks, a pirate, if so inclined, will probably not be deterred in tampering with the mark. On the other hand, since a digital watermark will not hamper the ability of a user to playback the file, hackers may be less inclined to remove or tamper with the mark since they will already accomplish their goal of distributing an unauthorized copy of a file by merely making it available on-line. While not fool-proof, digital watermarks have the potential of facilitating copyright owners' efforts to notify ISPs of infringers that are occupying the ISPs' networks.

C. Encode Original Recordings to Prevent Copying

The record industry may choose to take an aggressive posture towards unauthorized MP3s and attempt to stop users from making the initial MP3 copies of the original works. To do so, the industry may attempt to encode CDs in a manner that would prevent users from producing copies of the original CDs. Alternatively, the industry could stop manufacturing any more CDs and instead switch to DVDs since DVDs already allow for special encoding.(170) Current DVDs ship with settings for different regions around the world in order to restrict the geographical regions within which a DVD consumer can use a particular disc.(171) Additionally, a partnership between a large retail electronics chain and a Los Angeles law firm already markets a DVD hybrid, called Divx, that includes an additional layer of encryption, on top of the normal DVD encoding, that restricts the number of times a consumer is able to watch a disc.(172) The DVD players themselves already contain anti-copying technology that prevents consumers from making copies of DVD movies.(173) If the record industry produced music DVDs rather than music CDs, the industry would likely be able to encrypt the discs to prevent copying fairly easily since DVD technology already is capable of various types of encryption.

Although this sort of encryption would probably take away the average consumer's ability to make MP3 copies of copyrighted work, this type of solution is not guaranteed to completely succeed in stopping determined pirates. If the past is any indicator of future developments, diligent hackers and pirates will ultimately circumvent anti-copying technology.(174) Of course, the DMCA already prohibits the sale of "black boxes" designed to circumvent copy-prevention technology. Consequently, copyright owners have a legal recourse available in order to prevent the distribution of physical devices. However, it is conceivable that a sophisticated hacker could invent around a copy protection measure and, rather than sell a "black box," distribute the music on-line in the same manner that is occurring today with unauthorized MP3s. Physical deterrents to unauthorized copying of original recordings will prevent the average consumer from distributing unauthorized copies of original works. Unfortunately, the encoding of original discs will likely fail to prevent determined pirates from continuing to illegally distribute music files.

D. Don't Fight the Future: Allow MP3 Distribution to Maintain It's Current Course

If history is any indicator, another recommended course of action for the recording industry may be to take no action at all. For instance, the record industry expressed concern on several occasions in the past that the technological innovation of the day would undermine its business and result in mass copyright infringement. Two notable examples of this are the audio cassette tape and the DAT. With the benefit of hindsight being twenty-twenty, today we know that neither the audio cassette tape nor the DAT caused irreparable harm to the record industry in terms of lost commercial sales. Audio cassette tapes are slowly being replaced by the CD and the DAT is widely acknowledged as a commercial failure.

While it is inevitably true that some consumers make unauthorized copies of music while refusing to purchase original copies, many consumers seem to prefer purchasing original musical works. Consumers may want to own an authorized recording since they come packaged with artwork that is unavailable elsewhere. Moreover, fans of certain musical artists will usually show their support for these artists by purchasing copies of their works. As an example, "tape traders" and bootleggers staunchly oppose distributing copies of music available at retail.(175) These fans generally only copy and trade songs and versions of songs that are unavailable through commercial channels as a result of a business decision not to release the work by either the artist or the record label.(176) The record industry should consider that by allowing people to sample individual songs via MP3 files, the industry would promote the artists and possibly increase the artists' fan bases.(177) There is the possibility that some consumers would never listen to a certain artist if they were unable to sample their work at no charge. With the worldwide audience available via the Internet, recording artists, notably those that are not established or only have local followings, would gain exposure to consumers to which they would not otherwise have access. The net result could be an eventual increase, rather than a decrease, in sales. As a result of the enormous audience that the Internet provides for the record industry and the past failures of recording advancements to supplant retail sales, the record industry may want to consider a plan of no action and let the MP3 revolution take off unhindered by any resistance on their part.

E. If You Can't Beat 'Em, Join 'Em: Provide Industry-Supported Alternatives to Unauthorized Distribution of Music Files

Irrespective of whether the record industry chooses to use encryption methods to prevent piracy or to tolerate piracy given the failure of past technology to supplant commercial record sales, the industry should implement its own distribution channels in order to make authorized copies of music files available to on-line consumers. In devising their Internet distribution plans, the record industry should consider two suggestions: set up industry authorized web sites or adopt a shareware distribution system.

In lieu of fighting the Net music/MP3 revolution, the music industry could take a progressive stance and join the party. For instance, the SDMI could set up a site wherein they would offer authorized MP3 files from artists represented by the coalition members. There are several means the coalition could implement to control access to these files. In return for unlimited free downloading of any available titles, the web masters could limit access to the site through a membership fee. Alternatively, the industry could adopt a system such as IBM's recently announced Madison Project that allows record companies to sell songs one at a time to consumers.(178), (179)

Maintaining sites to control the distribution of music over the Internet could help the record industry ensure that the artists receive some compensation for the downloading of their works. However, a membership fee to access an MP3 web site or a charge to download a song may not be well received by the on-line community that currently trades in unauthorized MP3s. With the proliferation of unauthorized MP3 files, users of the Internet have already shown a preference for free materials and may be reluctant to pay for downloading songs that they may not like.

Perhaps a better tactic for recording artists, in terms of having some manner to control the distribution of Internet music, would be to adopt a shareware system. Computer programmers who wish to distribute their programs without having to use traditional retail channels have used shareware for years. Typically, the programmers make fully or mostly functional versions of their works available for free downloading.(180) If the end-user enjoys the program and wishes to keep it, the programmers ask the users to register the program by sending the programmer some sort of consideration.(181) Usually, the programmers ask for a nominal fee.(182) However, there have been some programmers who, in lieu of monetary compensation, ask for postcards or other unusual items.(183) In return for registration, the author of the program will normally send the user supplemental materials that could include a copy of the latest version, a printed manual, technical support, additional data files for the program, or other programs by that author.(184)

In regards to MP3 files, the musical artists could adopt this shareware system and allow users to download MP3 files at will and with no initial charge. The artists could then request that users send in some manner of consideration if they enjoy the music. To entice consumers to register the work, artists could provide promotional materials, such as stickers or photographs, or grant membership to a fan club after a consumer registers their copy. The end result of this arrangement would be that consumers would still be able to download music for no charge in order to sample a certain artist's work. If consumers become fans of the artist, they may feel compelled to support the artist's efforts by registering the file or they may register the file in order to receive promotional materials.

Admittedly, the use of a shareware distribution system has its disadvantages. One possible deficiency of a shareware distribution system is that it is a grass-roots method of reaching an audience. Basically, artists who use shareware would depend, in large part, on word of mouth and positive buzz to encourage consumers to download their songs and to eventually register them if the consumers become fans of the acts. Since there would be no obligation for consumers to register the files, the artists run the risk of giving their music away free of charge if the return rate on registrations is small or nonexistent.

In reality, the risk of lack of compensation may not be as dangerous as it appears at first glance. First, any registration fees would go directly to the artists. Therefore, their level of compensation would likely be greater than the corresponding royalties they would have received from record labels. For example, small or independent acts generally do not receive much compensation in the way of royalties in the first place.(185) The other factor that may mitigate the chance of artists essentially giving their music away is that, if the history of shareware in regards to computer software is any indicator, although initial registration returns may be slow, consumers tend to register the work in increasing numbers the longer the work is available.(186) As previously discussed, converted fans of a musician may register the file either out of guilt or to receive any materials the artist may offer in return for the registration.

Another possible disadvantage of a shareware system is that the artists will not have a record label actively promoting their efforts. Traditional distribution in the music industry generally involves a record label expending significant resources on promoting and marketing one of their acts. This often results in wide exposure via airplay on popular radio stations and a resultant increase in commercial sales. Of course, the whole idea behind using shareware is to circumvent traditional commercial channels of distribution. Consequently, should certain recording artists desire to adopt a shareware system to distribute their MP3 or other music files over the Internet, they should be willing to forego the promotional muscle that a record label could provide to them. In return, these artists would be able to take advantage of the vast distribution potential of the Net, possibly receive higher compensation for their works since they would circumvent the record label middle-man, and have the opportunity to communicate with and sell directly to their fans.

In a related aspect, the record industry is unlikely to welcome the prospect of a large portion of music artists distributing their works through a shareware plan. Recent accounts indicate that the record industry currently generates over $7 billion in annual sales domestically.(187) If a significant portion of artists market and distribute their works over the Internet as shareware, the industry will lose the ability to profit off those sales since the artist would directly receive the proceeds of any shareware registrations. It is also possible that the acts willing to self-promote over the Internet will not be limited to garage bands or local acts. As previously discussed in Part I.A, popular artists such as the Beastie Boys and Public Enemy already display a willingness to market their music directly to consumers through a web site while bypassing the record labels in the process. It should not be forgotten that the ultimate goal of copyright protection is to "promote the [p]rogress of ... useful [a]rts,"(188) and not necessarily to protect the profit margins of the recording industry. A shareware system has the potential to promote the goals underlying the copyright protections, assuming that the participating artists receive a sufficient return on their investment by way of registrations, even though the record industry's sales volume may suffer.

Neither of the aforementioned proposals, distribution via copyright owners' sites or via shareware, will eliminate on-line piracy of MP3 files. However, both schemes will allow the record industry and the musical artists to exert some control over the distribution of music files over the Net. Of the two plans, a shareware system would likely be more successful. Computer literate users are already familiar with shareware since programmers have used the system for years to distribute software. There does not appear to be any reason that shareware could not be a feasible method of distributing authorized copies of music files since both the ultimate content of digital music files and computer programs is basically the same: a series of 1s and 0s. By adopting shareware, recording artists could actually take advantage of the widespread copying of music files that is currently taking place in cyberspace. For example, if a shareware registration notice is appended to the original authorized copy of the file, it would appear on successive copies assuming that an end-user does not tamper with the code. As such, every user of a shareware version of an MP3 file would have the opportunity to register their copy. The artist could also entice consumers to register copies that they enjoy by providing registered owners with materials not otherwise available such as exclusive photos, stickers, or album art. Through the use of shareware, users would still be able to sample a wide variety of music available on-line at no cost, at least initially. If users enjoy a certain song, they would hopefully show their support for the artist by registering their copy of the song.

The Internet presents the record industry and musical artists with the ability to reach a vast audience and to easily distribute their music to those people. Unfortunately, cyberspace also presents the same opportunities to unethical users intent on distributing pirated and unauthorized copies of music. Although piracy is a very serious problem that threatens copyright owners' rights, it may be impossible to completely end the piracy of music over the Internet since the boundaries of cyberspace are virtually limitless. However, the recently enacted DMCA is smartly oriented around the regulation of information rather than controlling devices. As a result, technological breakthroughs are less likely to render the DMCA obsolete, unlike device oriented laws such as the AHRA. The Rio device and the current popularity of MP3 music files, both authorized and unauthorized, provide vivid examples of how technological advances and new inventions have the potential to eviscerate copyright laws geared towards regulating devices. Although Judge Collins, in Recording Industry Ass'n of America, Inc. v. Diamond Multimedia Systems, Inc., decided that the AHRA encompasses devices such as the Rio, an equally persuasive argument could be made that the Rio actually is not within the AHRA's jurisdiction. The Audio Home Recording Act provides an example of an act that is virtually obsolete, notwithstanding the fact that it is only seven years old, as a result of advances such as the MP3 format and the Rio.

The DMCA also provides the proper incentives for copyright owners and ISPs to act as copyright gatekeepers to the information superhighway. The DMCA contains provisions that may ultimately aid the record industry to search for on-line pirates by protecting digital watermarking and by specifying procedures that copyright owners may use to notify ISPs of copyright violations. Additionally, Congress encourages ISPs to shut down sites that infringe copyright owners' works by implementing safe harbors for copyright infringement. As more ISPs shut down increasing numbers of pirate sites in order to maintain their safe harbors against copyright infringement, on-line pirates should discover that their available forums are diminishing in number.

To ensure that their copyrights are protected, the music industry must take a proactive approach in dealing with Net piracy. While the industry will probably be tempted to implement physical copy protection safeguards, the copyright owners would probably find greater success in either diligently enforcing their rights through active monitoring of piracy or by adopting its own distribution scheme as a legal alternative to unauthorized files. As part of its monitoring efforts, the record industry should adopt some form of digital watermarking for its musical works. Alternatively, instead of policing cyberspace, the record industry may choose to join the on-line distribution of music by setting up their own sites. Perhaps the most effective way for individual artists to exploit the Internet would be to adopt a shareware system of marketing and distributing their recordings on-line. Through the use of shareware distribution, these artists would allow a vast number of people to legally sample their work. Hopefully, some of these users would become fans of the acts and register their copies of the music. Rather than attempting to prevent consumers from fully enjoying the benefits of MP3 and portable MP3 players such as the Rio, the music industry should concentrate its efforts on monitoring cyberspace and on developing methods to effectively deliver their works on-line. In the course of evaluating their Internet options, recording artists should seriously contemplate adopting a shareware system to distribute their music.

FOOTNOTES

1 Jube Shiver, Jr., Web Clicking with More Mainstream Americans, L.A. Times, Jan. 15, 1999, at C3.

2 Thirty-five percent of Internet users report using email while thirty-two percent report that they shop over the net. Id.

3 Robert Lemos, Survey: Net Will Change Music Business (visited Mar. 10, 1999) <http://www.zdnet.com/zdnn/stories/news/0,4586,2170270,00.html>.

4 P.J. Huffstutter, A Musical Free-For-All on the Net, L.A. Times, Feb. 8, 1999, at A1.

5 This paper refers to the Rio player, Rio-like players, Rio-type players, and portable MP3 players interchangeably.

6 This paper focuses exclusively on federal copyright law. It does not address any aspect of state, or common law, copyright protection.

7 Kevin M. Williams, Fight the Powers: Public Enemy Puts New Song Straight to Web, Chi. Sun-Times, Jan. 14, 1999, at 27.

8 According to Chuck D, "The Internet is a blessing in disguise ... there won't be such things as making a recording and then sitting on it while you deal with the record company red tape, legalities and radio station payola. The Internet breaks all of that." Id.

9 Eben Shapiro, Capitol Offense: Beastie Boys Groove on the Net, Putting Their Label in a Funk, Wall St. J., Dec. 18, 1998, at A1.

10 Id.

11 MP3.com is a web site that boasts a large collection of MP3 music files for download.

12 David Segal, Music Piracy On-line Targeted: Recording Industry Plans Technology to Protect Copyright, Wash. Post, Dec. 16, 1998, at C19.

13 Morning Report: Web Music, L.A. Times, April 16, 1999, at F2.

14 Alan Goldstein, Tuning in to the Web: Latest On-line Technology Captures Music, Worries Industry, Dallas Morning News, Dec. 29, 1998, at 1D, available in 1998 WL 23046152. Thanks to its web site, River Crossing has fans as far away as France.

15 Id.

16 Id.

17 Ron Harris, Tuning in to Your Computer, J. Rec. (Okla. City), Dec. 14, 1998, available in 1998 WL 11962607.

18 Cyber-pirates May Have Looted U2's New Songs, Minneapolis-St. Paul Star Trib., Nov. 19, 1996, at 4B, available in 1996 WL 6937349.

19 Chuck Philips, IBM Aims to Unplug On-line Music Pirates, L.A. Times, Feb. 8, 1999, at C1.

20 Id.

21French Student Infringed Reproduction and Performance Rights of Art Music and Warner Chappell France by Digitizing Musical Works by Michel Sardou and Posting Them on Student's Web Page on His School's Internet Server, Paris Court; Rules, Ent. L. Rep., July 1997, at 4, 4-5 (Vol. 19 No. 2) (reporting on Art Music France v. L'Ecole Nationale Superieure Des Telecommunications, Tribunaux de grande instance Paris, [1997] EEC 97 [ELR 19: 2: 4]).

22 Id.

23 Huffstutter, supra note 4.

24 Id.

25 Segal, supra note 12.

26 Harris, supra note 17.

27 MP3.com is located at http://www.mp3.com (visited Jan. 20, 1998).

28 Mediafind is located at http://194.95.209.6 (visited Jan. 20, 1998).

29 Both the Yahoo! and Infoseek searches were conducted on January 20, 1999.

30 Lycos to Launch Service Offering Links to MP3 Songs, L.A. Times, Feb. 1, 1999, at C2.

31 Id.

32 See generally Robert P. Merges et al., Intellectual Property in the New Technological Age 456-457 (1997) (discussing contributory infringement of copyrights).

33 P.L. 105-304, § 512(d), 112 Stat. 2860, 2881 (1998).

34 P.L. 105-304, § 512(d), 112 Stat. 2860, 2881 (1998).

35 Section 107 reads, in pertinent part, "the fair use of a copyrighted work ... for purposes such as criticism, comment, news reporting, teaching ... , scholarship, or research, is not an infringement of copyright." 17 U.S.C. § 107 (1997).

36 Per section 107:

37 For a more in-depth analysis of whether the fair use defense should apply to search engines, see Daniel Ovanezian, Comment, Internet Search Engine Copying: Fair Use Defense to Copyright Infringement, 14 Santa Clara Computer & High Tech. L.J. 267 (1998).

38 P.J. Huffstutter, Lycos Says It Won't Link to Pirated-Music Sites, L.A. Times, Feb. 3, 1999, at C9.

39 Id.

40 Harris, supra note 17.

41 U.S. Const. art. I, cl. 8. This portion of the Constitution grants Congress the power to "promote the Progress of Science and useful Arts."

42 Merges et al., supra note 32 at 323-324.

43 See Paul D. Amrozowicz, When Law, Science and Technology Worlds Collide: Copyright Issues on the Internet, 81 J. Pat. & Trademark Off. Soc'y 81, 84 (1999).

44 Congress only protected maps, charts, and books under the 1790 Act. Don E. Tomlinson & Timothy Nielander, Unchained Melody: Music Licensing in the Digital Age, 6 Tex. Intell. Prop. L.J. 277, 283 (1998).

45 Congress extended copyright protection to music in 1831. Id.

46 Merges et al., supra note 32 at 323.

47 See Fred H. Cate, The Technological Transformation of Copyright Law, 81 Iowa L. Rev. 1395, 1399 (1996).

48 In pertinent part, Section 106 reads:

49 17 U.S.C. § 106(6) (1997).

50 The Congress added the right to perform sound recordings by means of a digital audio transmission to the copyright statutes in an effort to respond to recent technological advances and to ensure that recording artists would maintain their copyright protection in the face of new technology. See generally Jeffery A. Abrahamson, Tuning Up for a New Musical Age: Sound Recording Copyright Protection in a Digital Environment, 25 Am. Intell. Prop. Ass'n Q. J. 181 (1997).

51 17 U.S.C. § 501(a) (1997).

52 17 U.S.C. § 106(1) (1997).

53 17 U.S.C. § 106(3) (1997).

54 17 U.S.C. § 106(6) (1997).

55 See Abrahamson, supra note 50 at 215.

56 Section 109(a) states, in pertinent part, "Notwithstanding the provisions of section 106(3), the owner of a particular copy or phonorecord lawfully made under this title ... is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord." 17 U.S.C. § 109(a) (1997).

57 Merges et al., supra note 32 at 439.

58 According to Merges et al., the "first sale doctrine" prevents copyright owners from restricting what consumers of a particular copy do with that copy. In their words, "[t]he purchaser may not copy it, but may resell it without restriction or liability." Id.

59 See Chuck Melvin, Securing Music on the Internet: Industry Works to Stop Pirating, Plain Dealer (Clev.), Dec. 26, 1998, at 3E.

60 See Id.

61 Erich Boehm, Download Dastards: RIAA Goes After Music Pirates at Midem, Daily Variety, Jan. 26, 1999, at 10.

62 Benny Evangelista, Liquid Audio to Put Its Mark on MP3 Music, S.F. Chron., Jan. 25, 1999, at B1.

63 Harris, supra note 17.

64 Id.

65 Fraunhofer IIS - Layer-3 Information (visited May 7, 1999) <http://www.iis.fhg.de/amm/techinf/layer3/index.html>.

66 Diamond Multimedia - Rio PMP 300: MP3 (visited Jan. 22, 1999) < http://www.diamondmm.com/products/misc/rio-mp3.html>.

67 Id.

68 Fraunhofer IIS - Layer-3 Information (visited May 7, 1999) <http://www.iis.fhg.de/amm/techinf/layer3/index.html>.

69 Simson L. Garfinkel, Singing the Rio Blues: Consumed by Concerns Over Piracy, Recording Industry is Tone Deaf to New Technology, Boston Globe, Dec. 17, 1998, at B20.

70 Many unauthorized posters of digital music believe that record companies are not likely to seek legal action against them so long as the quality of the files are "crappy." See P.J. Huffstutter, Music Wants to be Free on the Cyberspace Frontier, San Diego Union & Trib., May 14, 1995, at E1, available in 1995 WL 5717802.

71 Michael S. Mensik and Jeffrey C. Groulx, From the Lightweight "Rio" Flows Heavyweight Battle, Nat'l L.J., Dec. 14, 1998, at B5.

72 Frontline: Music Moguls Fear Format, NewMedia web site, Nov. 1998 (visited Jan. 25, 1999) <http://newmedia.com/NewMedia/98/12/frontline/Music_Moguls.html>.

73 Using a CD-ROM player is not the exclusive method by which a computer user could make MP3 files of songs. For example, users with the proper connections and hardware could conceivably tape a television program using a video cassette recorder and then, with the video cassette recorder connected to their personal computers, proceed to make MP3 files of the recorded program.

74 The term "ripping" is borrowed from the computer graphics industry. Raster Image Processors (RIPs) are programs used to convert images in one form to another form that is able to be printed on a high-quality printer. Garfinkel, supra note 69.

75 Id.

76 Goldstein, supra note 14.

77See Id.

78 See Huffstutter, supra note 71.

79 Wendy Leibowitz, The Sound of One Computer Copy, Nat'l L.J., Nov. 2, 1998, at A16.

80 Diamond Multimedia - Rio PMP 300 (Home Page) (visited Jan. 22, 1999) <http://www.diamondmm.com/products/current/rio.cfm>.

81 Tom Abate, Diamond Multimedia Systems is Caught in Legal Quagmire / Music Publishers Fighting Firm's New Digital Gizmo, S.F. Chron., Oct. 13, 1998, at C1, available in 1998 WL 3925088.

82 Supra note 80.

83 Id.

84 See Goldstein, supra note 14.

85 Diamond Multimedia - Rio PMP 300 : In-Depth (visited Jan. 22, 1999) <http://www.diamondmm.com/products/in-depth/rio-id.html>.

86 Supra note 80.

87 See Recording Industry Ass'n of America, Inc. v. Diamond Multimedia Systems, Inc., 49 U.S.P.Q.2d 1024, 1026 (C.D. Cal. 1998).

88 Supra note 80.

89 Id.

90 Diamond Multimedia, 49 U.S.P.Q.2d 1024.

91 Diamond Multimedia, 49 U.S.P.Q.2d at 1032.

92 Diamond Multimedia, 49 U.S.P.Q.2d at 1032.

93 RIAA Appeals Denial of Injunction Against Internet Music Device, Intell. Prop. Litig. Rep., Jan. 13, 1999, at 6.

94 Garfinkel, supra note 69.

95 Diamond Multimedia, 49 U.S.P.Q.2d at 1032.

96 House Ways and Means Committee, 102nd Cong., 2nd Sess., H.R. Rep. 102-873(II), reprinted in 1992 U.S.C.C.A.N. 3600, available in 1992 WL 236754.

97 Wayne Thompson, Audio Cassette Recorder Market Thrives, San Diego Union & Trib., Feb. 2, 1995, at E2, available in 1995 WL 5694215.

98 Wayne Bledsoe, Consumer Graveyard Filled with Fossils of Technology, San Diego Union & Trib., Nov. 17, 1998, at 5, available in 1998 WL 20060072.

99 Supra note 96.

100 Id.

101 Id.

102 Id.

103 Id.

104 See discussion infra Part III.A.4.

105 See discussion infra Part III.A.3.

106 Statement by President George Bush upon Signing S. 1623, 28 Weekly Comp. Pres. Doc. 2188, 1992 U.S.C.C.A.N. 3609 (Oct. 28, 1992).

107 Thompson, supra note 97.

108 Bledsoe, supra note 98.

109 Id.

110 17 U.S.C. § 1001(3) (1997).

111 Id.

112 Section 1001(11) defines "serial copying" as "the duplication in a digital format of a copyrighted musical work or sound recording from a digital reproduction of a digital musical recording" and "does not include a digital musical recording as distributed, by authority of the copyright owner, for ultimate sale to consumers." 17 U.S.C. § 1001(11) (1997).

113 Section 1002(a) reads:

114 Section 1001(3) reads, in pertinent part:

115 Section 1001(1) reads, "A 'digital audio copied recording' is a reproduction in a digital recording format of a digital musical recording, whether that reproduction is made directly from another digital musical recording or indirectly from a transmission." 17 U.S.C. § 1001(1) (1997).

116 Supra note 85.

117 See MAI Systems Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993) (loading a computer program into random access memory involved making a copy of the program for purposes of 17 U.S.C. § 106).

118 Under section 117, it is not copyright infringement for "the owner of a copy of a computer program to make ... another copy ... of that ... program" when the new copy is "created as an essential step in the utilization of the ... program ..." 17 U.S.C. § 117 (1997). Since programs must be loaded into memory before a computer can execute them, this section authorizes RAM copies to be made in those instances.

119 17 U.S.C. § 1001(4) (1997).

120 17 U.S.C. § 1001(3)(B) (1997).

121 Diamond Multimedia , 49 U.S.P.Q.2d at 1026.

122 Diamond Multimedia, 49 U.S.P.Q.2d at 1030-1031.

123 Diamond Multimedia, 49 U.S.P.Q.2d at 1031.

124 Id.

125 Diamond Multimedia, 49 U.S.P.Q.2d at 1030-1031.

126 Senate Judiciary Committee, 102nd Cong., 2nd Sess., Report No. 102-204, at 53, 1992 WL 133198 (June 9, 1992) (emphasis added).

127 17 U.S.C. § 1002 (1997).

128 Diamond Multimedia, 49 U.S.P.Q.2d at 1031-1032.

129 Under section 1008, "[n]o action may be brought ... alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device ... or based on the noncommercial use by a consumer of such a device ... for making digital musical recordings." 17 U.S.C. § 1008 (1997).

130 Id.

131 17 U.S.C. § 1009 (1997).

132 17 U.S.C. § 1008 (1997).

133 Id.

134 Huffstutter, supra note 71.

135 17 U.S.C. §§ 1003-1007 (1997).

136 17 U.S.C. § 1006 (1997).

137 17 U.S.C. § 1007 (1997).

138 Diamond Multimedia, 49 U.S.P.Q.2d at 1031.

139 Robert Lemos, Hacked Rio to Pose Legal Problems?, ZDNet Headlines (Jan. 27, 1999) <http://www.excite.com/computers_and_internet/tech_news/zdnet/?article=/news/19990127/2195688.inp>.

140 House Commerce Committee, 105th Cong., 2nd Sess., Report No. 105-551(II), at 67-68, 1998 WL 414916 (July 22, 1998).

141 House Commerce Committee, 105th Cong., 2nd Sess., Report No. 105-551(II), at 66-67, 1998 WL 414916 (July 22, 1998). Other provisions of the DMCA, which are not relevant to this discussion, address ephemeral recordings, exemptions for libraries and archives, exemptions for computer maintenance servicers, and, curiously, a section regarding protection for original vessel hull designs in the marine industry.

142 Pub. L. No. 105-304, §§ 1201-1205, 112 Stat. 2860, 2863-2876 (1998).

143 Pub. L. No. 105-304, § 1201, 112 Stat. 2860, 2863-2872 (1998). It should be noted that this prohibition does not take effect for two years after the enactment of the Act.

144 According to section 1201(a)(2):

145 House Commerce Committee, 105th Cong., 2nd Sess., Report No. 105-551(II), at 100, 1998 WL 414916 (July 22, 1998).

146 Id.

147 Id.

148 Report on the Activities of the Committee of the Judiciary, 105th Cong., 2nd Sess., Report. No. 105-845, at 377, 1999 WL 4817 (Jan. 2, 1999).

149 Section 512(a) reads, in pertinent part:

150 P.L. 105-304, § 512(b), 112 Stat. 2860, 2878 (1998).

151 Id.

152 Under section 512(c)(1):

153 P.L. 105-304, § 512(c)(1)(A)(iii), 112 Stat. 2860, 2880 (1998); P.L. 105-304, § 512(c)(1)(C), 112 Stat. 2860, 2880 (1998).

154 P.L. 105-304, § 512(c)(2)-(3), 112 Stat. 2860, 2880-2881 (1998).

155 Boehm, supra note 61.

156 Geoff Edgers, Knocking Boots: On the Front Lines of the Ever-Nastier Bootleg and MP3 War, SPIN, Mar. 199, at 56.

157 To place some perspective on the size of the RIAA, the RIAA currently boasts an annual budget of $20 million. Id.

158 Id.

159 Pub. L. No. 105-304, § 1202, 112 Stat. 2860, 2872-2874 (1998).

160 David Segal, Music Piracy Online Targeted: Recording Industry Plans Technology to Protect Copyright, Wash. Post, Dec. 16, 1998, at C19, available in 1998 WL 22541284.

161 Id.

162 Melvin, supra note 59.

163 Dickerson M. Downing & Brendan P. McFeely, MP3 Gets Music Industry's Ear: Will Digital Audio Format Mean On-Line Boom in Pirated Tunes?, N.Y. L.J., Feb. 16, 1999, at S3.

164 Huffstutter, supra note 4.

165 Liquid Audio Extends Leading Internet Music Delivery System to Support New "Genuine Music" Open Standard and MP3 Format, Business Wire, Jan. 25, 1999.

166 Evangelista, supra note 62.

167 Id.

168 To further emphasize this point, Diamond Multimedia recently announced that they would include a "digital rights management" system on the Rio that would enable the devices to recognize one particular type of watermark. Nevertheless, the new Rios would still be able to play unauthorized, unmarked MP3 files. Briefly: Company Town Annex, L.A. Times, April 24, 1999, at C2; InterTrust and Diamond Multimedia's RioPort Division Partner in Digital Rights Management for MP3 Music Portables, Business Wire, April 26, 1999.

169 Evangelista, supra note 62.

170 Although DVDs are currently marketed as video products, there appears to be no reason why a record company would not be able to release music DVDs that only contain audio data. DVDs already contain both audio and video information. Using DVDs would also allow record companies the option of including video data as a bonus for consumers that own DVD players. It should be noted that current DVD players are capable of playing both CDs and DVDs. See Peter Lewis, ABCs of DVDs - A Codebook for Video Technologies, Seattle Times, Nov. 1, 1998, at C1 (discussing DVD technology).

171 For example, DVDs sold in the United States are encoded "Region 1" and are only operable in DVD players that are able to read "Region 1" discs. See Id. (discussing DVD technology).

172 Circuit City and Ziffren, Brittenham, Branca & Fischer currently market Divx as an alternative to conventional movie rentals. Id.

173 Michael J. Meurer, Price Discrimination, Personal Use and Piracy: Copyright Protection of Digital Works, 45 Buffalo L. Rev. 845, 883 (1997).

174 Id.

175 Tape traders will not trade music that they can buy in regular nation-wide chain music stores. Jeff Kuhn, Official Frequently Asked Questions (FAQ) for alt.music.bootlegs (last modified Mar. 20, 1998) <ftp://ftp.visi.com/users/astanley/ambfaq.txt>.

176 According to the alt.music.bootlegs FAQ, "There are very few people who would not buy a legitimate release by an artist because they have a bootleg tape." Id.

177 Several bands have already successfully utilized free MP3 files as an effective promotional "loss leader." For example, punk-pop band Poster Children posted one free MP3 song on the web in advance of its release of its latest album. Three thousand people downloaded the song during the first week that the file was available. Jonathan Vankin, Downloading the Future: The MP3 Revolution - The End of the Industry as We Know It, L.A. Weekly, Mar. 26 - April 1, 1999, at 36.

178 IBM's Madison Project system allows consumers to download recordings in a proprietary format through high-speed cable lines. The Madison Project also enables customers to download album artwork and could be expanded to allow customers to burn CDs of music they download. Interestingly, IBM's system is not compatible with MP3. As a result, users who currently use MP3 formats may lack the desire or motivation to switch to the Madison Project. See generally Chuck Philips, IBM Aims to Unplug Online Music Pirates, L.A. Times, Feb. 8, 1999, at C1 (description of IBM's Madison Project).

179 Additionally, IBM designed the Madison Project to operate on high-speed cable lines. Since the installed base of cable modem users is not as large as traditional phone line users, this also may potentially limit the technology's success. This last concern may not prove to be as serious as the lack of MP3 compatibility since the use of wide bandwidth lines, such as cable lines, to connect with the Internet is increasing as more users seek faster connections than are possible over traditional phone lines.

180 Steven Hudgik, Writing and Marketing Shareware 1 (2nd ed. 1992).

181 Id.

182 Id.

183 As an example of the unusual types of consideration programmers request, an author of a package of Macintosh desktop patterns simply requested that satisfied customers send him an email in return for his work. This program can be found at <http://www.earthlink.net/~ronin47/> (downloaded Dec. 15, 1996).

184 Hudgik, supra note 178.

185 See Goldstein, supra note 14 (quoting a local Dallas-area band member who claims that most musicians earn more from live performances than from their records if they are not a big name act). See also Sarah Luck Pearson, For the Record: The Life and Premature Death of Mary's Danish, L.A. Weekly, Mar. 26 - April 1, 1999, at 24 (an up and coming alternative band of the late 1980's, Mary's Danish, received virtually no compensation from their record sales).

186 Hudgik, supra note 178 at 18.

187 Albums wholesale for about $10 each and domestic album sales for 1998 totaled 711,000,000 units, resulting in a dollar volume of $7.11 billion. Huffstutter, supra note 4.

188 U.S. Const. art. I, cl. 8.