Ex-Post vs. Ex-Ante: EMusic Takes Another Approach to Napster
The system uses an "acoustic fingerprinting" technology that 'listens' to Napster users files and, once it makes a match with an EMusic song, sends a DMCA infringement notice to the user with a 24 hour grace period. What I found interesting about the plan was that it takes a fundamentally different approach to the problem of illegally distributed music files from the major labels' who have placed their bets with digital rights management (DRM) to enforce copyright holders desired usage restrictions. As such, DRM is a solution that takes an 'ex-ante' approach to the problem in that the content owner are able to dictate how the media is used, copied and distributed and apply those restrictionc PRIOR to its distribution. The media is basically placed in Al Gore's proverbial 'lock-box' that is programmed with various permissions. Two main problems have emerged with this approach though. (i) The usage rules may become too difficult and/or constraining. For example, Sony's digital download (DD) announcement allowed users to make only two copies of a purchased DD, one of which could only be transferred to a Sony portable device. This not only raises issues around consumer's fair usage under the AHRA Act (Audio Home Recording Act of 1992) as interpreted in the Rio case, but strikes at the need of providing a user-friendly process. (ii) If the encryption is cracked, there's not much the copyright holder can do once the 'decoder' is distributed online. DVD and SDMI have at least proven that. So copyright holders' control over their media will only last as long as the encryption isn't cracked, and the situation only worsens, as cracking technology becomes more effective with time. So although it's not cracked today, it almost certainly will in an eventual tomorrow. EMusic on the other hand has taken an 'ex-post' approach by identifying and notifying infringers after the illegal act. This in fact lies at the heart of EMusic's philosophy: "We believe that people are fundamentally honest." So the choice of distributing the EMusic catalogue using the MP3 format versus a DRM-supported format such as Liquid Audio or MWA makes sense since the overwhelming number of people will respect common sense usage rules. For those who are not honest, they will be identified and dealt with. But the mass of consumers will be able to enjoy the affordable and user-friendly environment offered by EMusic through the MP3 format. In addition, EMusic consumers will not be constrained in their fair usage of EMusic media: limited duplication, CD burning and sharing with family & close friends, unrestricted use on user-owned audio devices, but no public distribution. Well, at least that's how EMusic interprets fair usage, and I mention it because it goes against David Boies' argument that sharing music with the Napster community is fair use. In fact, when I questioned Gene Hoffman, President & CEO of EMusic, on whether Napster threw a wrench in the philosophical premise of the honest consumer, he remained unequivocally behind the premise, this despite the 38+ million Napster users trading between 1/3 to 1/2 of EMusic's catalogue. The problem stated Gene, in a media conference call held on Tuesday, lied in consumer education: they would respect the rules if they only knew them. And justifiably, he points to Boies cries of Napster being fair use as confusing and misguiding otherwise good-meaning consumers. But he also pointed to the majors for wielding too large a stick and simply being unfair with the consumer. "EMusic strikes a balance between the two," noted Gene. By giving infringers 24 hours to comply by removing the files from their sharing folder, he explained that they were giving the user the benefit of the doubt and might even consider rewarding those who comply. If the system works, it would allow EMusic to compete with the major labels download initiatives by, on the one hand, offering the popular MP3 format (with all its advantages) while enforcing common sense copyright usage rules. It would also represent a real alternative to DRM, a middle ground accommodating both copyright holders and consumers. Where it may pose a disadvantage, is in the long run to the extent that DRM provides copyright holders with tools allowing then to experiment with different business models and incentive programs that would form the basis for entertainment as a service versus a commodity. For example, a purchaser of a digital download might get a free viewing of the artist's video if they can get five other friends to buy the single. Only an ex-ante approach can provide the rich functionality and flexibility to implement these types of business models that will eventually constitute the future music industry. Other points of interest:
* The system took EMusic just two developers working over a three weeks period. If that is so, how can the major labels' claim of wanting to protect the artists' rights be really taken seriously? If anything, it reinforces the impression that the majors are not so much concerned with artists being compensated for use of their music as they are in controlling through litigation the direction and development of the online music industry. Gene had noted that they were not interested at this stage in suing Napster because they didn't want "to limit Napster's development or the technology." * "Peer-to-peer was developed to bypass copyright." This statement by Gene simply floored me since I've argued in the paper I recently presented to ACSEL and the IDATE Foundation that P2P's roots can in fact be traced back to the NASA Beowulf project and SETI@Home projects (the latter of which seem to really intrigue the French). In addition, the statement totally disregards the incredible efficiencies in storage, processing power and bandwidth offered by the new networking paradigm. The real potential of P2P in fact is not so much in the entertainment industry, but rather in creating B2B online marketplaces, for knowledge management and offering intelligent agent functionality. About Eric de Fontenay (stratagem@taggin.com)
Eric de Fontenay has spent his career understanding and developing solutions for the emerging telecommunications and digital markets. He has worked on a wide range of issues including the developement of e-marketplaces, impact of broadband and the evolving state of digital distribution and rights management.
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