Free Internet Stuff– An Entitlement?

(Editorial note: Sometimes you have to report things people don’t want to hear. We think the music companies are
going to start playing hardball with MP3s over the next year, and think that’s going to be a big ongoing news story next year.
We think you should know that. If you don’t want to hear it, fine, but that’s not going to stop it from happening, and if it does,
you shouldn’t think nothing bad can possibly happen to you no matter what happens. We’re not saying it will, or even that it’s very likely,
just that it could.)

Derailing the Gravy Train

The results from the Billboard poll are hardly surprising. When people have been getting something for free, they don’t want to pay for it.

But let’s look at what’s going on here. had to pay out tens of millions of dollars to settle copyright infringements, and is going to become a subscription service. Napster will undoubtably have to lay out money, too, and
they’ve already indicated they’re going to become a subscription service, too.

By agreeing to a subscription service, the music companies have taken a step the software companies haven’t. Imagine Microsoft saying to the average computer user, “Use any of our programs you like for $25 a month.”

They’re essentially saying, “For the price of a couple CD’s a month, go grab whatever you like.” This is quite different from “you want our music, go pay $12-14 a CD.”

By lowering the price of availability, the music companies have made the argument for free music a lot harder to answer.

Why Are You Entitled To Free Music?

Anybody who thinks MP3s should be free for anybody to download has to be able to answer that question. Here’s some that I’ve heard:

They Can Afford It

Call up Domino’s, order a pizza, and when the delivery guy asks for the money, tell him that. Go to a Mercedes dealership and say that. Or the IRS.

Let’s say you’re the one charging for the work. If half the people you do work for tell you after you’re done, “I’m not going to pay you, you can afford it,” how would you feel about that?

I Can’t Afford It

Well, I can’t afford a Mercedes, either, but that doesn’t mean I’m entitled to one. Even if I really, really wanted one. Something around $25 a month should be reasonably affordable to most people, at least in the high-income areas of the world.

Most Music Sucks And It’s Overpriced

You might have had a point before, but now that the option “all you can download for $25 a month,” that argument becomes a lot weaker, doesn’t it?

This Is Valuable Free Advertising for Bands

It’s pretty odd advertising if the beneficiary doesn’t want it. There’s some that don’t mind, and that’s fine, but what about those bands that want to get paid?

I Can Hear It for Free Over the Radio

Actually, not. The people broadcasting the music have to pay royalties to the music companies. To pay those royalties, they have to have advertising. So while money isn’t coming out of your pocket, the radio station is charging you a time tax.

Sure, you can change stations every time an ad comes on, but then you’re spending time trying to find another station playing something you like. So you spend time anyway.

They Can’t Catch Me

Let’s look at that a bit. It’s pretty clear that if you’re centralized like Napster or MP3; you’re going to get nailed for big bucks.

Of course, alternatives have arisen to take care of that; Gnutella, for one. What you need to realize is that peer-to-peer simply makes the peer liable to copyright infringement, and the peer is you. If people download music from you, you become liable.

I Have The CD; I Have The Right To Have An MP3 Copy of It

Actually, when it comes to MP3s, that’s pretty arguable. A 1992 Act allowed noncommercial digital copying for noncommercial use using certain types of equipment, but CD-ROMS/CD-Rs etc. aren’t included.

There’s earlier law to fall back on but that law allows you to MAKE a copy from your original; it does not say you can get a copy from someone else. Whether the latter is allowable is at least questionable; what is not questionable is that the person from whom you downloaded from anonymously would be guilty.

This Is Just Like Lending My CD To A Friend

Napster and MP3 argued that, didn’t work. At all. Besides, whatever made you think lending your CD to a friend (if it were to make a copy) was legal? You’d never get caught doing it, but that doesn’t make it legal.

They Can’t Catch All of Us

They don’t have to catch all of you in order to prosecute some of you. As you’ll see below, it wouldn’t be all that hard to cripple even a peer-to-peer network given current patterns.

Even If They Catch Me, They Can’t Do Anything To Me

They Can Only Nab Me If I Make Money Off It

No. You can be convicted of copyright infringement without making a dime.

Until late 1997, copyright infringement did require you make money from it, but the No Electronic Theft (“NET”) Act of 1997 changed that.

I Don’t Have Anything for Them To Take

If you get fined, and can’t pay the fine, that’s fine, they’ll either put you in jail or (more likely) make you pay later.

One thing they will do if you get convicted is seize your computer. The law requires that upon conviction.

So? I Won’t Allow for Any Downloading

While that strategy probably minimizes (though doesn’t eliminate) the possibility of any legal problems, if no one allows downloading in a Gnutella system, there’s nothing to download.

From some statistics I’ve seen, even with peer-to-peer, most people do just that. The vast majority of downloads come from something like 1% of the sites. That would make it fairly easy to shut down the biggest providers. If people started getting arrested for this, you can bet a lot of the other big contributors would shut down operations fast.

Some others would step up, but if the policy were to continually shut down the big providers, and the distribution
pattern didn’t disperse, any peer-to-peer network would eventually be crippled. The only way to make such a network relatively safe would be for most people to leave themselves open and liable, hoping that the law couldn’t catch tons of little minnows rather than a relatively few big fish. That probably would work, but that’s not the reality now, and probably won’t be in the future.

The strategy of “just take” works only as long as there’s somebody else out there giving. Stop the givers and the takers are left high-and-dry.

I’ll Sue!!!

I talked about some potential electronic tricks the music companies could or might pull in the future to “encourage” you to subscribe.

I got some interesting responses to that. There seems to be a common belief that if you sue, you automatically win. Uhhh, no.

A few tried the “I’ll sue because I own the CD (or at least I will once I run down to the CD store and persuade a friend to give me a backdated sales slip for one)”.

All I’ll say on that one is that that’s a pretty neat trick to pull on a computerized point-of-sale system, and that if you get caught fabricating evidence, courts are pretty likely to punish you quite a bit for it.

When I made the initial comments, I thought about a couple lunatics actually putting in something destructive, but anything anybody big might do would probably be just to put up a screen that says what you did every once in a while. After a little more thought on the matter, the music companies
could simply borrow from the shrink-wrap licenses of software companies, and just provide a screen explaining that if you continued attempting to play this spoofed MP3, you were giving permission to have such a screen put into your system. A voluntary virus, so to speak.

I think the whole thing unlikely, not for the legal ramifications, but for public relations, at least in the near-term.

Rather, I think non-invasive spoofing, selective prosecutions of the biggest MP3 providers, or just flooding these networks with inoperable MP3s would probably be the first steps taken by the music companies.

Carrot and Stick

The music companies have come up with a carrot of monthly subscriptions. In an ideal world, this would be sufficient. If the Billboard poll and general human nature are any guides, though, it’s going to take more than a carrot to get people to give up a freebie.

So expect the stick to come out. Maybe six months, a year, a year-and-a-half from now.

The very likely aim of the music companies is going to be to make getting
free MP3s enough of a hassle to get most users to subscribe to services.
Just how they’re going to do it; I don’t know, but I’m pretty sure they’re
going to do some things. One big club the music companies have in their
favor is that not too many sane people are going to go to court when doing
so proves they have been doing something illegal.

I don’t know how big the stick will be. I don’t know how many sticks will be used. I just know it’s extremely likely that some kind of stick is coming.

It’s Not Just MP3s

It’s become a common belief that everything on the Internet should be free. In the long run, that’s not going to work, either.

To a large degree, people have been spending billions essentially giving things away in the hope of eventually charging either directly (through subscription fees), or indirectly (through high advertising rates) for whatever services they provide. A lot of these people are running out of money, and they aren’t going to be getting any more.

Dot.coms are starting to close their doors, and a lot more will do so in the next years. More solidly financed places are likely to say “forget it” if they begin to believe their Web enterprises will never become profitable activities.

Advertising can certainly keep some places afloat, but advertising rates have been heading downward; there’s more supply of websites seeking ads than there is advertiser demand, and some advertisers are questioning whether they’re getting enough bang for their buck.

This doesn’t mean the Internet will die, far from it. Businesses have good reason to use it, plenty of people will put up websites about themselves and their hobbies.

It’s the section of the Internet that primarily provides information that stands a good chance of shrinking. If you aren’t selling anything besides information, and people won’t pay for that, and you can’t get enough money from advertising to sustain it, what else can you do?

In the next couple years, especially if you see an economic downturn, expect to see some infoareas to get a lot leaner.

Email Ed

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