Rosen at House Hearing On "Piracy On Peer-to-Peer Networks"

September 26, 2002

Statement of Hilary Rosen Chairman and CEO Recording Industry Association of America Before the Subcommittee on Courts, the Internet and Intellectual Property Committee on the Judiciary U.S. House of Representatives

Mr. Chairman, Representative Berman, and Members of the Subcommittee, I want to thank you for holding this important hearing today. This is the first hearing Congress has held to specifically examine the effects of copyright theft over peer-to-peer networks on the Internet.

And as a representative of the industry that has been so far the hardest hit by this enormous problem, I am deeply grateful to this Subcommittee for taking the lead in focusing on what is becoming an epidemic for the American economy and culture.

Just to give you an idea of the amount of copying that is occurring on unlicensed, free peer-to-peer systems -- the most popular network, KaZaA, boasts on its site that its file-sharing software has been downloaded more than 120 million times. It is estimated that more than 2.6 billion files are copied every month – and no creator, no property owner is compensated for these copies.

I wish I could tell you that there is a silver bullet that could resolve this very serious problem. There is not. The answer resides in a combination of efforts that must be undertaken at the same time: 1) extensive public education about the illegality of file-sharing; 2) the widespread availability of licensed services that consumers desire; 3) criminal and civil enforcement; and 4) technological self-help measures that prevent illegal copying and make it less desirable. These are all essential parts of assuring the vitality of our copyright system and the incentive to create new works.

We begin with education. Today, a coalition of artists and industry workers entitled MUSIC, Music United for a Strong Internet Copyright, have launched a nationwide campaign to inform America that downloading music on the Internet without paying the creator is theft – plain and simple. Polls show that many Americans still do not know that downloading an artist’s song on one of these unlicensed services is unlawful. The words used in this campaign come from the artists themselves. And the message is clear – taking music on the Internet is no different than taking it from a store. The law protecting the right to reproduce a creative work applies on the Internet in the same manner in applies to sales of illegally made CDs on the street.

I want to emphasize that technology is not the enemy. Peer-to-peer technology holds amazing promise for creators and consumers to experience entertainment and to communicate in ways never before available. It is the misuse of technology – employing it to deprive compensation to creators – that must be tackled.

For the past two years, record companies have been working with download sites and new subscription services to create a legitimate alternative to piracy networks. There now exist dozens of places on the Internet to download authorized music and a dozen new competing on-demand monthly subscription services, all of which pay the creators. They are not yet perfect. In the legitimate world, it takes time to negotiate licenses in the free marketplace, to develop secure encryption and digital rights management systems, to negotiate with all rights holders, to develop new royalty payment systems, and to organize and digitize for new delivery our vast music catalogs. Pirate systems face none of these obstacles. While in Internet time it may seem like an eternity, in only three years we are well on our way to transforming an entire industry.

Enforcement of creators’ rights is another key component. I want to thank all of the Members of this Subcommittee who signed a letter to the Department of Justice urging that they prosecute those who create systems intentionally developed to enable theft, and to prosecute those who intentionally steal through peer-to-peer services. And we applaud the Department for its recent announcement explaining that theft on these systems is no different than theft through a different medium – and that they will prosecute copyright crimes on peer-to-peer networks. In addition, in the civil courts, we have brought suit against the most popular peer-to-peer services for mass copyright infringement. We are pleased that the courts have ruled that services such as Napster and Aimster must be held accountable. The Judge in the Aimster case recently summed it up best when it said that Aimster “managed to do everything but actually steal the music off the store shelf and hand it to [its] users.” We are hopeful that the courts will come to the same conclusion in the case we have filed, along with the movie studios and the music publishers, against KaZaA, Morpheus and Grokster. Enforcement alone, however, is not enough. We must be able to technologically prevent the illegal downloading of our creations over these systems.

That is why I also want to thank Representative Berman and cosponsors for introducing a bill that is intended to level the technological playing field by assuring that copyright owners can take preventive measures that will deny the downloading of their works when it is not authorized – without invading a user’s privacy or damaging a user’s computer or network.

An example of why it is so important to give copyright owners the ability to defend themselves with the same technological measures used by pirates to encourage theft came just this week when KaZaA announced that it was giving its users “better options and more tools than ever before … include[ing] a filter to help users avoid … misnamed or incomplete files that may have been uploaded by record labels and copyright owners trying to frustrate file sharing.” It is truly ironic that we can be stopped from trying to protect ourselves against unlawful copying by technology, but using technology to prevent unlawful use is met with a firestorm of controversy. It is also ironic that KaZaA can employ a filter to avoid spoofed files, but not to filter out copyrighted works to which they have no right.

Unfortunately, there has been a lot of misinformation about this bill. Some have characterized it as allowing copyright vigilateism, or letting record companies and movie studios hack into people’s computers, and crash networks. These irresponsible descriptions at best reveal a misunderstanding of the text and purpose of the bill, and at worst purposely cloud the real issues and problems with unlicensed peer-to-peer networks. It is the use of a peer-to-peer system that opens up a user’s hard drive to the rest of the world, not the Berman bill. It is the current practice of those who have created today’s unlicensed peer-to-peer systems that invade a consumer’s privacy through spyware and the selling of consumer information, not the Berman bill. In fact, the bill prevents these activities, along with hacking, deleting or altering material, and causing damage to a computer. We support these prohibitions and other solutions to assure that all privacy and damage concerns are addressed. But we ask that those who share these concerns with us help us to come up with real solutions that also curtail massive piracy over these networks.

The intent of the bill, it seems to us, is simply to allow a copyright owner to prevent the initial downloading on a peer-to-peer system of specifically identified material that it owns. An analogy might be a U.S. Coast Guard boat that is out in the sea preventing unlawful goods from entering the United States. It is not doing damage to the sender or the intended recipient, it is not boarding any other boats, or initiating any harm. It is simply acting in a defensive manner to block admission and to deny an illegal transfer. In our opinion, this preventive activity is warranted and necessary.

Many of these types of activities are already allowed under current law, and copyright owners are availing themselves of their rights to protect their works. But some laws that were written at a time when peer-to-peer networks were not even contemplated have created some unintended confusion and ambiguity. It is sort of like a statute that was written to protect bank statements in the 1950s being applied to measures utilized to protect ATMs today. The Berman bill will clear up any uncertainty in both the application of current law and the respect that copyright owners must and should have for the integrity of networks and an end user’s privacy.

We, like others, have many questions about the application, scope and exposure to copyright owners in the bill. But we are committed to working with the Subcommittee to resolve these questions and to work with those who have raised other legitimate concerns.

And we are also committed to working with all parties who have a stake in creating a legitimate digital marketplace that will continue to make possible the gifts that music has brought to listeners around the world.

I would like to close, Mr. Chairman, by noting that, because of term limits, this may be the last time that our industry has a chance to formally appear before you as Chairman of this Subcommittee. To call your tenure as Chairman extraordinary in the formation of modern copyright law would be a gross understatement. Your leadership is responsible for future creations that we have not even imagined. And your legacy is appreciated by all of us who are involved in the creative arts. We salute you and thank you.

As I indicated in the beginning, the MUSIC coalition launched today a public education campaign. And I would like to end by showing a 30 second spot that lets the artists speak for themselves. Thank you.

#####

The Recording Industry Association of America (RIAA) is the trade organization that supports and promotes the creative and financial vitality of the major music companies. Its members are the music labels that comprise the most vibrant record industry in the world. RIAA® members create, manufacture and/or distribute approximately 85% of all legitimate recorded music produced and sold in the United States.

In support of this mission, the RIAA works to protect the intellectual property and First Amendment rights of artists and music labels; conduct consumer, industry and technical research; and monitor and review state and federal laws, regulations and policies. The RIAA® also certifies Gold®, Platinum®, Multi- Platinum™ and Diamond sales awards as well as Los Premios De Oro y Platino™, an award celebrating Latin music sales.