The Evolution of technology, digital content and copyright By Elan Oren

Media History Up to 80 ’ s – Analog  Relatively low quality  High capacity  Costly creation, storage and bandwidth  Costly replication  Copying with redundant quality  Partial protection From the 80 ’ s – Digital  Very high quality  10x Compression  Very low cost of creation, storage and transportation  Easy low cost replication  Copy identical to Master  Impossible to protect

The Problem The PC  Easy creation of digital media  Easy duplication  Easy distribution  NO control Internet  Ideal as a distribution vehicle  The wider the bandwidth the bigger the demand.  Original music was widely made available in Media  Mostly not protected  Easy to crack

The Constitution and Legal milestones Congress shall have the power “ to promote the progress of science and the useful arts, by securing for limited times to the authors and investors the exclusive right to their respective writings and discoveries ” – Betamax Universal Vs. Sony – Making copies for personal use is a felony – Increase the term of copyright to 95 years – Digital Millennium Copyright Act (DMCA) – “ Security System Standards and Certification Act ” – Did NOT pass.

Internet and Digital media Time line 1998 mp3.com starts mymp3.com service. The company is sued by the music industry for millions. In 2000 it losses in court and pays $100m ’ s in damaged to the plaintiffs. The company goes bankrupt and bought by one of the majors. NO ORIGINAL content is made available by the majors. ISP WEB ISP MP3.COM sever hosts users music files

1999 Napster, Scour ו -iMesh introduce P2P services based on a centralized server. Napster is sued by the majors. In 2001 it losses in court and goes bankrupt. Scour and Audiogalaxy shutdown their services. NO ORIGINAL content is made available by the majors. ISP WEB ISP Napster server hosts the files index only Internet and Digital media Time line

2000 Gnutella a P2P decentralized open source protocol. BearShare, Limewire and other use Gnutella. NO ORIGINAL content is made available by the majors. ISP WEB ISP Internet and Digital media Time line WEB site And software download only

Internet and Digital media Time line 2001 The Fasttrack decentralized protocol is used by Kazaa, Morpheus, Grokster and iMesh. The joint community is larger then Napster. Kazza is sued in the Netherlands. Kazza, Morpheus and Grokster get sued in CA. Other services such as eDonkey. NO ORIGINAL content is made available by the majors. Except PressPlay and MusicNet.

Internet and Digital media Time line 2002 Kazza WINs in the Dutch court. Industry appeals and losses again. Based on the 1984 BetaMax rolling in the case of Universla Vs. Sony NO ORIGINAL content is made available by the majors. Except PressPlay and MusicNet.

Internet and Digital media Time line 2003 Grokster ו -MusicCity WIN in CA court based on the BetaMax case. Verizon is sued to make end-user data available to the plaintiffs. Verizon wins and end-users privacy is kept. End-users of P2P systems are sued. iMesh is sued in NY. For the 1st time commercial original digital content is made available trough i-Tunes, Rhapsody, MusicMatch, BuyMusic,Napster and others.

Global recording music sales in numbers 2001 – Total sales $34b. Sales fell by 5% in value and 6.5% in units from France up 10% and UK up 8% (3 rd largest market). “ The falls are attributed to several factors including economic slowdown, a massive proliferation of CD-burning and increasing availability of unauthorized internet downloads ”. Source: IFPI Music Piracy Report 2001.

Global recording music sales in numbers 2004 – Total sales $32b (estimated). Sales grew by 1.7% in value and 1.3% in units from USA up 5% and UK up 0.6% France down 5%. “ The figures reflect a slowing of the rate of decline in music sales of the past four years. This is the best first-half year result achieved since Sales in regional and individual territories varied widely, with the effects of unauthorized file-sharing on the internet and commercial piracy, among other factors, still affecting many of the world's markets ”. Source: IFPI the recording industry – commercial piracy report 2004

Slower Sales As formats age, overall revenue has declined 13% since Fewer Titles New releases have dipped 14% since 1999 Higher Prices The cost of a CD has risen 16% since 1997 The CD ’ s Sad Song The forces behind falling music sales. The music industry likes to blame P2P pirates for its financial woes. But consumers have plenty of others reasons to stop buying CDs, like higher prices and a dearth of new material. In recent years, the number of releases has fallen 14%, and CD prices have climbed 16%. Listeners were paying more and purchasing less- and sales of CDs sank 7%. This isn ’ t to say that felonious file-sharing hasn ’ t hurt sales. Stan Liebowitz, author of Re-thinking the network economy, says illegal downloads have dealt a $1B blow to the music industry. But what the RIAA doesn't want to admit is that CD is reaching the end of its life cycle, just like the cassette did several years ago. Hey, labels, want some unsolicited advice? Give the people what they want; more music at a cheaper price. Oh, and you might wanna stop suing your customers, too. - Rebecca Harper, Wired 10/2003

Music Piracy The scale and nature of the problem Source: IFPI music piracy report in 3 music CDs sold worldwide is a pirate product $4.5B in pirate value. About $10B in real value

Slower Sales As formats age, overall revenue has declined 13% since Fewer Titles New releases have dipped 14% since 1999 Higher Prices The cost of a CD has risen 16% since 1997 The CD ’ s Sad Song Hey, labels, want some unsolicited advice? Give the people what they want; more music at a cheaper price. Oh, and you might wanna stop suing your customers, too. - Rebecca Harper, Wired 10/2003