File-Sharing Services Have Plan to Pay
Group Says It Can Protect Music Industry
By Frank Ahrens
Washington Post Staff Writer
Thursday, October 9, 2003; Page E01
A group representing the Internet's most popular free music-sharing service has come up with a business plan that it says would stop piracy by allowing consumers to legally buy copyright-protected music, though the music industry remains skeptical.
Distributed Computing Industry Association, a trade group formed in July by the parent companies of song-sharing services Kazaa and Altnet, rolled out the plan at its Arlington headquarters yesterday, saying it could earn the music industry up to $900 million per month in Internet music sales.
The group characterized the plan as a starting point for peacemaking discussions with a music industry hostile toward free file-sharing Web sites, which it says rob musicians and record labels of billions of dollars in royalties and revenue they would otherwise get through music sales.
The trade group said its plan would work only if it were joined by other file-sharing sites, such as Grokster and Morpheus -- which have formed their own trade group -- the music industry and Internet service providers, or ISPs. The music industry's trade group, the Recording Industry Association of America (RIAA), has waged a legal campaign to shut down free file-sharing sites such as Kazaa.
"We are in an earn-your-trust mode," said Marty Lafferty, chief executive of the trade group. "This plan is kind of like looking at a concept car at a car show," the first of three to five business plans the group will roll out in coming months.
More than 4 million users per week employ Kazaa, many to illegally swap copyrighted songs for free, the music industry says. The RIAA sued to shutter Kazaa, as it did Napster in the past, but a federal court ruled in April that Kazaa and other song-sharing Web sites are not responsible for the actions of their users.
The trade group is meant to equally represent three interests -- file-sharing services such as Kazaa, content providers such as music labels, and digital pipelines such as ISPs, Lafferty said. Thus far, however, the only announced members are Kazaa and Altnet, the two file-sharing services that funded the group's start-up.
The RIAA maintains it wants consumers to be able to legally buy digital songs on the Internet, but it favors Web sites such as Apple's iTunes music store, as opposed to peer-to-peer services such as Kazaa.
The plan from the trade group representing Kazaa and Altnet would roll out in stages, starting with the record companies allowing their songs, protected with copyright tools rendering them unlistenable, to be distributed on networks such as Kazaa. Consumers would pay Kazaa to unzip the copyright-protection shroud, enabling their computer to play the song.
Later stages of the plan would shift the billing to Internet service providers, which would be required to monitor which songs users are listening to, raising potential privacy concerns and putting ISPs into a business they may not want to enter.
"For us to somehow be responsible for monitoring and tacking every download that might flow through our system is extremely unrealistic, and the ISP would turn into the Internet police," said Sarah B. Deutsch, associate general counsel for Verizon Communications Inc., the nation's largest phone company and a top ISP. "And it would also create the world's most complicated billing system."
The RIAA reacted coolly to the plan.
"It's nice to hear that a couple of the [peer-to-peer] services are actually interested in finding a business solution," said RIAA spokesman Jonathan Lamy. But "it is hard to take seriously proposals to turn [peer-to-peer] systems into legitimate businesses when they continue to induce users to violate the law and willfully refuse to use available technologies to stop the rampant infringement of copyrighted works on their networks."
Meanwhile, the name of Napster, the service that first popularized online song swapping, will be revived today as a legal Internet music store that will go head to head with such competitors as iTunes, the Associated Press reported, citing sources familiar with the plans.