Beyond Napster: Using Antitrust Law to Advance and Enhance Online Music Distribution

Abstract

What should be the broad principles guiding the copyright and competition policy governing online music? In short, what are the key concerns or values that we want preserved in relation to the distribution of music online? We will outline the background to the present investigations and existing law in Part I and argue in Part II that these concerns can be encapsulated in two broad areas: (1) the preservation of some scope for private and personal use and (2) the encouragement and growth of a diverse sector for the distribution of copyrighted works online. We also argue that, at least at present, the proper balance has not been achieved in either area. The particular principles we identify as important for promoting competition in the music industry include maximizing (1) content availability, (2) distribution technology, (3) fair individual use of content, and (4) the welfare of all stakeholders, as well as minimizing technologies of control that invade users' privacy or unduly restrict use of content. Of course, regulators do not have free reign to pursue these principles. Current law and market structure constrain them. Our next question then moves from the realm of the ideal to the real: What should be the minimum terms of settlement? In Part III, we propose three key concessions from the recording industry, including the agreement 1) not to sue small and limited forms of digital music file sharing (known as virtual private networks), 2) to include consumer groups on industry standard-setting bodies, and 3) to disclose and limit digital rights management techniques.

Second, we ask: How can we evaluate the means possible to achieve these ends? We contend that proposed reforms should be evaluated along axes of plausibility and comprehensiveness. As we will argue, those proposals which are most comprehensive - that is, the proposals most likely to achieve our stated aims in full - are also least plausible in the current institutional and legal environment. This motivates us to look for more realistically achievable, albeit less comprehensive goals. In other words, we would like to explore not just principle, but also issues of what, pragmatically, can be done in light of existing institutions and path dependence as well as principle.

Third, we ask: What institutions are available that can plausibly promulgate and effectively apply regulations to achieve these ends? It is here in Part III that we turn to the antitrust authorities as potential promulgators of regulations embodying our preferred outcomes. We will argue that, in the context of these technological developments, in the area of copyright law, neither the legislature, nor the courts, are going to strike the right balance. We therefore look to regulatory agencies, and in particular, the antitrust agencies, which are less likely in this context to be subject to capture by copyright interests. In Part IV, we outline the relative competencies and liabilities of Congress, the courts, and a range of administrative agencies in applying such regulation. We conclude by endorsing an expanded role for administrative agencies and a more restricted one for the courts.

Keywords: copyright, antitrust, intellectual property, music, copyleft

JEL Classification: O34