P2P Advocate Wants Roundtable Talks on File-Sharing Fate

P2P United Exec. Dir. Adam Eisgrau urged lawmakers to bring all those interested to negotiations under committee auspices exploring whether voluntary collective licensing for digital music downloads -- like in radio -- can move the market forward. He said the committee must reach out to others on Capitol Hill -- specifically colleagues in the Senate Judiciary Committee whose jurisdiction includes copyright and patent matters.

At a high level, such talks would educate players, but products also could emerge, he said. Artists and rights holders would get paid for billions of previously uncompensated downloads; govt. intervention would be limited; broadband would get a significant boost through the success of lawful P2P traffic; and investment dollars would pour in, Eisgrau said. Additionally, music fans would have legal access to a virtually unlimited selection of music and the distribution bottleneck for independent artists will be unclogged, he said: “I can’t promise you that all of those things will come to pass, but the potential that they might warrants discussion.”

RIAA CEO Mitch Bainwol argued that the court struck the right balance and Congress “should leave well enough alone.” He suggested stakeholders “live life a little bit” and revisit the issue if complications emerge as the lower courts work to apply the Supreme Court’s decision. “Right now it is very clear that you have a very broad consensus. Tech companies are happy and content is happy . The court did the right thing,” he said. MPAA Exec. Vp Fritz Attaway agreed, saying the high court’s decision will have “a huge impact on the way the parties behave and ultimately on the amount of piracy on the Internet.” Though the ruling didn’t satisfy the content and high-tech industries’ initial aspirations, it creates strong incentives “for all parties to work together to address the problem of piracy,” he said.

Eisgrau also wants legislators to provide relief for high-tech innovators and investors from what he called “potentially astronomical and crippling” statutory damages for secondary copyright infringement liability. He told the committee that penalties up to $150,000 per copyrighted work infringed can be awarded a copyright owner without proof of financial harm. “The current availability of massive statutory damages for technology innovators stands squarely between America’s technology economy and its brightest possible future,” he said: “Leaving these penalties on the books uncalibrated after the Grokster decision can’t help but freeze the basements out of which the next great technology otherwise might have emerged and super-chill the board rooms of investors looking for the next great thing.”

The Supreme Court decision allows a legitimate industry to emerge and prosper and will “positively affect the future development of advanced technology for media distribution and the associated hardware and software industries, World Media Chmn. Gregory Kerber said. It puts to rest questions that held back many consumer- friendly advances and allows venture capital to invest in legitimate businesses, “knowing with certainty that they will be able to compete fairly and on the quality of their offerings.” Not so, said Mark Heesen, pres. of the National Venture Capital Assn. He said the high court’s decision left many questions unanswered and left investors vulnerable.

Grokster’s long-term impact could be problematic for innovation and the VC community specifically because the malleable standards -- vague in formulation and unpredictable in application -- could invite courts to 2nd guess design decisions and expose investors to “potentially ruinous litigation,” he said. The entertainment industry has never been satisfied with attacking direct copyright infringement, Heesen noted. From the player piano through MP3 players, the industry has sought to “destroy or control” innovation, often extending its infringement crusade to the inventors who created and the investors who funded the product or service, he said: “Abuse of the product should be attacked -- not the product itself, nor the inventor behind it, nor the venture capitalist who funded the venture.”

During the hearing, Commerce Chmn. Stevens (R-Alaska) had strong words for the P2P industry. “We are going to be watching. We want to know what you are going to do to follow up on this [court decision] to give greater protection to this copyrighted material,” he said: “I don’t hear much myself that indicates that there'll be any attempt at finding ways to set standards and bring into new generations a concept that we don’t condone stealing property.” Some lawmakers are eager for the Senate to “move now” but Stevens said his committee wants to proceed sensibly and figure out what might be done to “terminate this illegal activity.”

Sen. Boxer (D-Cal.) zeroed in on pornography housed on P2P networks and the risk of children being exposed to the adult content. Boxer said she wrote multiple letters to heads of several file-sharing firms -- including Limewire, Grokster and eDonkey -- asking how they were addressing the problem. She said she never received a response. “It’s a disgrace and it has to be stopped. The whole world is watching now,” she said. Stevens added, “Senator Boxer and I rarely agree but when we do, I think people ought to listen.” He noted that his committee plans an autumn hearing on P2P porn proliferation.