Ownership in the digital world as illustrated by the case of the Kazaa

Ownership in the Digital World
as Illustrated by the Case of
the Kazaa File Sharing Network
JAKOB
SAROS
Master of Science Thesis
Stockholm, Sweden 2007
Ownership in the Digital World
as Illustrated by the Case of
the Kazaa File Sharing Network
JAKOB
SAROS
Master’s Thesis in Media Technology (20 credits)
at the School of Media Technology
Royal Institute of Technology year 2007
Supervisor at CSC was Roger Wallis
Examiner was Marko Turpeinen
TRITA-CSC-E 2007:061
ISRN-KTH/CSC/E--07/061--SE
ISSN-1653-5715
Royal Institute of Technology
School of Computer Science and Communication
KTH CSC
SE-100 44 Stockholm, Sweden
URL: www.csc.kth.se
“I would like to leave you with the impression that if you make a single illegal copy of our
software, you will spend the next five years in court, the following ten in prison, and forever
after your soul will suffer eternal damnation.”
-V. Rosenburgh in Moore, 2001: 1
“It has been pretended…that inventors have a natural and exclusive right to their
inventions…. If nature has made any one thing less susceptible than others of exclusive
property, it is the action of the thinking power called an idea…. Its peculiar character … is
that no one possesses the less, because every other possesses the whole of it. He who receives
an idea from me, receives instruction himself without lessening mine; as he who lights his
taper at mine, receives light without darkening me. That ideas should be freely spread from
one to another over the globe, for the moral and mutual instruction of man, and improvement
of his condition, seems to have been … designed by nature…. Inventions then cannot, in
nature, be a subject of property. Society may give an exclusive right to the profits arising
from them, as an encouragement … to pursue ideas which may produce utility, but this may
or may not be done, according to the will and convenience of the society, without claim or
complaint from anybody.”
-Thomas Jefferson in Schiffrin, 2001: 138
Ownership in the digital world as illustrated by
the case of the Kazaa file sharing network
Abstract
The digitization of content has had a major impact on the music industry over the last few
years. Most noteworthy is the development of file sharing services used to distribute music,
often but not always, without the consent of copyright holders. Recent changes in legislation
such as the InfoSoc Directive of the European Union (Directive 2001/29/EC) are designed to
counteract piracy in the virtual world. However, the increasing degree of control demanded
by content providers also has the effect of making it difficult to distribute music online. This
report follows the development of the file sharing application Kazaa and shows the inherent
problems involved in licensing content. It is argued that content providers, with the support of
copyright law, have used several measures to stop file sharing services and control content. It
is suggested that current legislation enables an imbalance between content providers and
companies that desire to license technology, in favour of content providers. Moreover,
although this kind of control is legally justified it is argued that from the philosophical natural
rights perspective on ownership that it cannot be morally justified. Arguments are made that
show the importance of a (cultural) common, which is present in the writings of John Locke.
However, it is concluded that content providers have begun to adapt to online distribution and
started to license content more than previously. If they are able to develop attractive services
for consumers that make music more accessible this situation can be resolved without
changing copyright law. This could also be facilitated by compulsory licenses and shortening
copyright duration. Unless there is significant change, copyright may have to be changed
from the ground up by first identifying the relevant aspects that form the basis for a just,
creative and attractive society.
Ägande i den virtuella världen - en fallstudie
av fildelningsnätverket Kazaa
Sammanfattning
Digitaliseringen av media har haft ett stort inflytande på musikindustrin under de senaste
åren. Fildelningsprogram har i synnerhet varit betydande eftersom de ofta används, men inte
alltid, för att distribuera musik utan upphovsmännens tillåtelse. För att bemöta olaglig
kopiering på Internet har förändringar i den svenska upphovsrätten gjorts, baserade på det
EG-direktiv som behandlar upphovsrätten i informationssamhället (direktiv 2001/29/EG).
Den ökade kontrollen inom musikbranschen får dock till följd att det blir svårare att
distribuera musik på Internet. Denna rapport följer utvecklingen av Kazaa och pekar på de
problem som existerar när det gäller att licensiera material från musikbranschen. I rapporten
argumenteras det att innehållsleverantörer, med stöd av upphovsrättslagstiftningen, har använt
sig av flera metoder för att skapa en obalans mellan upphovsmän och företag som vill
licensiera musik, till fördel för de förstnämnda. Dessutom argumenteras att denna obalans inte
går att rättfärdiga från ett filosofiskt perspektiv på ägande, baserat på Lockes naturrättsliga
perspektiv. Argumentationen stödjer sig bl.a. på betydelsen av en (kulturell) allmänning.
Rapporten konstaterar samtidigt att musikbranschen har börjat anpassa sig till distribution på
Internet och visat en vilja att licensiera material i högre utsträckning än tidigare. En större
förändring av upphovsrättslagstiftningen kan dock förhindras om innehållsleverantörer kan
erbjuda tjänster som gör musik mera tillgängligt för konsumenter, vilket kan förenklas genom
obligatoriska licenser och en förkortning av skyddstiderna i upphovsrätten. Om detta inte
genomförs är det möjligt att en större förändring av upphovsrätten är nödvändig och bör
utföras genom att först identifiera de faktorer som utgör en grund för ett rättvist, kreativt och
attraktivt samhälle.
Contents
Introduction......................................................................................................................................1
I. Case study.....................................................................................................................................2
Methodological framework and research design ......................................................................2
Theory ..........................................................................................................................................7
Background .................................................................................................................................9
The music industry....................................................................................................................13
The case of Kazaa .....................................................................................................................15
Other music industry responses to Kazaa and file sharing services in general.....................23
Discussion..................................................................................................................................26
Conclusions so far.....................................................................................................................29
II. Philosophy.................................................................................................................................30
Introduction ...............................................................................................................................30
Property .....................................................................................................................................31
John Locke’s theory of ownership...........................................................................................38
A Lockean analysis of ownership ............................................................................................40
Conclusions ...............................................................................................................................47
Works cited ....................................................................................................................................51
Part I...........................................................................................................................................51
Part II .........................................................................................................................................55
1
Introduction
Traditionally, information (i.e. content, be it music, literature or something else) had to be
bound in things like books or records. It had to be materialized in something physical and to
copy information has been a process of manufacturing objects. In addition, these physical
items were exclusive meaning that one person could only use them at a time. Copying was
expensive and time consuming, and as a result of this reproduction has been restricted to
those who have had the power and opportunity to duplicate (e.g. publishers and record
companies). In order to prevent freeloaders who profit by copying other’s work, laws have
guarded authors’ expressions giving them a monopolistic right to profit from their creations.
The role of expressions has been to make free ideas physical and subject to ownership.
Albeit lately, there have been changes in the common person’s ability to copy and spread
content due to the possibility of digitizing content. Digitization marks a change in the need of
physical representations. Actually, the physical representation is becoming irrelevant.
Whereas in the past we were forced to store content as letters on paper or pictures on film, the
expansion of the Internet means that information will not have to be carried by any traditional
physical media. It is not until now that we are able to experience the true characteristics of
information as a public good, i.e. that several persons can use it simultaneously without
reducing the ability for the provider to use the product.
During the last years online distribution of music has grown rapidly. A large part of that has
been due to unauthorized file sharing services, where content is spread with or without the
consent of copyright holders. These services are different from physical piracy in that the
provider of the service may or may not profit. Peer-to-peer (P2P) file sharing has become
increasingly popular. When comparing traffic generated by P2P and standard web traffic it
now seems that P2P account for a majority of HTTP bytes transferred. Cachelogic, a
company that specializes in P2P research, have estimated that P2P applications use between
60-80 % of ISP (Internet Service Provider) capacity on networks (Cachelogic, 2006).
According to Statistics Sweden roughly 1,1 million Swedes, about 13% of the population
have used file sharing services (n.d.).
The objective of this thesis is twofold. First, is a descriptive case study of file sharing network
Kazaa focused on the tension between content providers and technology developers. This will
show rights holders’ responses to new technology and how the strategies involved in order to
control content has worked in the case of P2P distribution. It will be argued that current
legislation creates an imbalance with respect to content control in favor of content providers,
which is counteracted by file sharing services.
Second, this report will examine if rights holders are justified in controlling content by
performing a philosophical analysis of intellectual property. The objective is to examine
which ownership rights to immaterial products that can be justified according to Locke’s
natural rights theory of property, which is then related to copyright legislation. The focus is
on those rights that are challenged by file sharing. This will conclude if file sharing of
copyrighted material violates any ownership rights. The hypothesis is that ownership rights in
copyright legislation are not fully supported by Locke’s theory. It should be emphasized that
the discussion of ownership is from a philosophical rather than a legal perspective. This paper
focuses on the moral rights we can have to property and the implication of this discussion is
how to construct such rights in a legal system.
2
I. Case study
Methodological framework and research
design
This section discusses the framework of the study and describes qualitative case studies more
in-depth.
Qualitative studies
Case studies can be both quantitative and qualitative, but as my own study will be qualitative
I will focus on these. Merriam describes the significant features of qualitative studies as
focused on “understanding the meaning people have constructed”, that “the researcher is the
primary instrument for data collection and analysis”, that it usually involves fieldwork, and
that it employs an inductive research strategy (Merriam, 1998: 6-8). The objective of an
inductive research strategy is to construct new concepts and hypotheses, rather than testing
old theories. Typically, the design and object of a qualitative study will change as the study
progresses, being flexible to new findings and approaches to data. Unlike quantitative studies,
the product of qualitative research is a rich description of a phenomenon using words and
images rather than numbers. Case study data could be made up of quotes from interviews or
documents, and excerpts from videotapes. Data samples are also carefully chosen in a nonrandom fashion as opposed to random samples in quantitative studies (Merriam, 1998: 8).
Case study defined
There is some confusion regarding the definition of a case study. Different descriptions focus
on both the process of conducting a case study, as well as the unit of study, and the product of
the investigation. Merriam concludes that the boundaries of the study is important and thus
the “single most defining characteristic of case study research lies in delimiting the object of
study, the case” (1998: 27). Miles and Huberman (in Merriam, 1998: 27) picture a case study
as a heart with a circle around it, where the heart is the focus of the study and the circle
defines the edge of the case. Case studies are therefore particularistic in that they focus on
specific situations, events or phenomenon. They are also descriptive in that the result of a case
study is a “complete” description of the studied events, oftentimes over a period of time and
including many variables and their interaction with each other. The product of this description
is oftentimes qualitative. Case studies usually focus on processes and the description of
context and people included in the study, as well as a causal explanation of why something
occurred. In addition to this, case studies are also heuristic which means that the end product
of the case study gives the reader new and deep insight to knowledge that was previously not
known or confirms previous findings about a particular phenomenon (Merriam, 1998: 29-33).
Strengths and limitations
The advantage of case study method is that it produces a rich description of complex, real
social situations where there are problems in defining the relevant variables before the study.
This may lead to the development of new hypotheses further down the road. Generally
speaking, case study should be chosen when it is the best design for answering the research
questions. This, of course, has to be analyzed by the researcher before the study begins
(Merriam, 1998: 41).
Drawbacks of the case study method include the possibility that the researcher does not have
enough time or money for the project. Reports from case studies also run the risk of being too
long and detailed. Case studies might exaggerate and oversimplify certain factors in a
3
situation, and falsely claim to represent reality when in fact they only represent parts of it.
Case studies are also greatly affected by the characteristics and integrity of the scientist
conducting the research, and the researcher must be very tolerant to ambiguity in data as well
as sensitive to the context of the study and the data. Accordingly, pretty much anything could
be shown by a case study depending on the selection of data made by the researcher. There is
also the possibility that certain individuals will get too much influence on the study as
informants. The issues of reliability, validity, and generalizability have also been criticized in
case studies (Merriam, 1998: 42-43). See sections below for further comments on these
issues.
In my study I quickly realized that I needed somebody with a deep knowledge of Kazaa and
its history. It would be too much work to interview everybody that had been involved, and I
had neither the time nor the ability to contact and perhaps travel to meet these persons. The
solution was to use one informant that could give a detailed account of the history of Kazaa,
hence the choice of Kazaa founder Niklas Zennström. The downside to this is that he got a lot
of influence on my data, maybe too much. It proved difficult to check everything he said and
it was generally difficult to get people to talk about Kazaa and peer-to-peer networks.
Therefore I had to rely on most of his statements. Obviously, he is a biased source of
information and due to the serious litigation against him and other companies surrounding
Kazaa I would think that he is rather sensitive about passing out information. Thus, the
general perspective in the study is more from the side of technology developers, rather than
rights holders or consumers.
Selection and definition of a case
The reason for choosing case study as a method was because I wanted to examine the
development process of a file sharing service and the tension with the music business. Since I
was unsure of the variables that have affected recent events, the case method proved to be a
good method for investigating the history of Kazaa.
I had a couple of reasons in deciding upon Kazaa as the basis for my case study. First of, it
had connections to Sweden as Niklas Zennström, the founder of Kazaa, is a Swedish citizen
and contact had been established between him and the Royal Institute of Technology in
Stockholm previously. Furthermore, Kazaa has been one of the most used peer-to-peer
applications, which makes it appropriate to study. This has been showed by looking at the
software download website Download.com (Fetscherin and Zaugg, 2004: 432). Kazaa is also
sometimes claimed to be the most downloaded software on the Internet ever (Skarin, 2005:
11). It is probably very difficult to verify that statement, and I will not try to do that here. As
of September 2006, there had been roughly 390 million downloads of the Kazaa Media
Desktop, according to the Kazaa website (Kazaa, 2006). There are definite problems with
estimating the total number of Kazaa users since many users utilize other versions, like Kazaa
lite, rather than the authorized one provided by Sharman Networks.
Another advantage with studying Kazaa is that it has been around for some years, which
means that it is possible to study the historical developments and content providers have
targeted it. Kazaa has been involved in some very publicized litigation over the years, most
notably in Australia and in the U.S., so there was an established conflict with the music
industry that was interesting. Chances are high that most other peer-to-peer networks have
been in the some situation as Kazaa at some time in their development. The current trends in
peer-to-peer networks are shifting from Kazaa to other applications, so there was the
possibility of studying the life span of a network from development to decline in usage.
The focus of the case study is on the conflict between content producers (represented by the
music industry) and innovators of new technology (represented by the developers behind
Kazaa). However, in order to examine this I will look at the birth of Kazaa, the initial ideas,
the development of the application, how the use of it took off, and the reception by the music
industry and their answers to Kazaa. In short I want to look at the evolution of a peer-to-peer
4
network. In time I will limit myself to the period from around 1999, with the first ideas of
Kazaa, to 2006 when Kazaa settled with the recording industry.
Data collection
The sample strategy for this study has then been to use purposeful sampling, i.e. to use
informants with a special knowledge of the case or the music industry in general. In selecting
sources of information, I started with identifying important actors. I realized that I would need
information from both the technology developer perspective as well as the content provider
perspective. Technology developers are represented by one of the founders of Kazaa, Niklas
Zennström, and Phil Morle from the present owner of the Kazaa service, Sharman Networks.
The Dutch collecting societies organization Buma/Stemra, as well as the Swedish branch of
the international record company Sony BMG represent content providers. I omitted end users
of Kazaa on purpose. Although important for understanding the success of Kazaa, users of
file sharing services are not the main focus of this paper as much as the collision between
technology developers and content providers. In addition to these actors I have studied
articles, books and reports on the subject.
I used the interview with Niklas Zennström to get an overview of the history Kazaa that
provided the general direction of my study. I interviewed the present owner of the Kazaa
application Sharman Networks by mail. Although I never got to interview a representative
from the Dutch collecting society Buma/Stemra, they contributed several documents that
were important for showing negotiations between Kazaa and Buma/Stemra. However, it is
impossible to include all notable persons that have been directly involved in Kazaa. The
solution then is to speak to persons with a general knowledge of the business. Therefore I
interviewed Victor Fredell who is the Sony BMG digital sales representative in Sweden to get
their view on Kazaa, file sharing in general, and their attempts to stop it. The time involved in
researching, as well as conducting, transcribing and analyzing each interview, puts a limit on
how many that can be performed for a small study like this. Most of the information to this
case study comes from interviews but I have also accessed documents, journals and
newspaper articles etc. In addition, I have researched other examples of infringing
technology, the history of P2P, and the music market in order to outline the context of the
study.
Interview strategies
Personal interviews were semi structured, in that there were a mix between fixed questions
and more open-ended questions. I used an interview guide with a list of themes and/or
questions to be covered during the interview. In the Zennström case, for example, I started out
with an introductory question and then he proceeded to talk on certain subjects with relatively
little intervention from interviewers (there were three of us), other than to clarify certain
matters. Interviews were recorded with a portable MiniDisc player and all interviewees were
briefed on the purpose of the interview as well as it being recorded.
Interview transcripts
I transcribed interviews by listening to the recordings. A problem with transcribing is that it is
sometimes difficult to hear what the person on tape is saying due to poor quality of the
recording. This was especially evident in the tape of the Zennström interview which displayed
overall poor quality. Different persons also hear different things on a recording and interpret
spoken language differently. The discrepancy between written and spoken language is another
problem. How is one to translate spoken language into something that is readable? An
interview is being done in a social context, which does not translate onto paper and means
that certain information, like body language disappears from a transcript. The quotes from my
interviews used in this paper have been translated from Swedish to English.
5
The role of theory
A common way of using case studies is to form new theories through an inductive process.
Theories deriving from case studies are usually substantive in that they deal with specific and
everyday situations rather than “grand theories” that are more formal and general in nature.
Glaser and Strauss have proposed a specific research method of substantive theory called
“grounded theory” (in Merriam, 1998: 17), meaning that theory is grounded in and built from
data. However, in this study I will mostly try to relate empirical data to existing economic and
STS (Science and technology studies) rather than building a grounded theory. In the future,
there may be a need for constructing substantive theory on the effects of new technology on
the media industry that deal with these areas more specific.
Internal validity
To which extent are the results of a study consistent with reality? This is the main question of
internal validity. In case studies internal validity focuses on understanding participants’
perspectives and human behavior in a contextual framework, rather than to uncover some
objective truth (Merriam, 1998: 203).
To make sure that internal validity has been conserved I have tried to understand the
underlying motivation behind informant’s participation and to interpret them based on that.
However, I believe that the standpoint of informants in this study is quite clear.
Reliability
Reliability concerns questions regarding the replication of results from a study. The reliability
of data from a case study depends on the information from numerous informants as well as
the skill of the researcher. Since reality is constantly changing, there are difficulties in
repeating a study and expecting the same results. Several interpretations of a single event are
also most likely possible. Therefore, Lincoln and Guba suggest that reliability should be
interpreted as to what extent conclusions are consistent with the collected data (in Merriam,
1998: 206).
When analyzing interviews and other documents I have grouped data into different categories
by identifying different patterns within the data. After that I have tried to interpret different
statements within its contextual framework and to construct a coherent story of Kazaa. Finally
I have related this to theory.
External validity
External validity deals with the issue of generalizing the results from a study to other
situations. The problem with case studies is obvious, and the question is if it is possible to
generalize results from one case that uses nonrandom population sampling as a source for
data? Several solutions have been proposed to answer this question. Cronbach (in Merriam,
1998: 209) suggests working hypothesis that take into account the context and local
conditions of the study. Erickson (in Merriam, 1998: 210) proposes the term concrete
universals, meaning that specific cases may yield general knowledge that can be transferred
to other situations. This is similar to how we learn things in everyday life by learning from the
outcome of specific events. In-depth studies of a particular case can make it easier to see
similarities with other cases. Another strategy is to leave generalizations to the reader of the
study, who then is responsible for applying results to other contexts.
As far as my study is concerned I leave generalizations to the reader, but I believe that parts
of this study might be useful in understanding the relationship between technology and the
media business.
6
Research ethics
Since Kazaa has been involved in many on-going lawsuits over the past years there are some
ethical problem surrounding this study. In my communication with Sharman Networks I was
told that any information a company communicates can be used in court, which opens for the
possibility that statements are used completely out of context. Therefore I have been
extremely sensitive in interviewing and using data from them as to prevent any possible harm.
This was also evident after my interview with Niklas Zennström when he was kind enough to
provide copies of documents relating to Kazaa. However, as his attorney explained, these
could not be used freely and the final version of this report had to be authorized before
publication. Obviously this limits the possibility of making a complete study of Kazaa at this
point, since many of the participants cannot provide full information without the threat of a
lawsuit.
7
Theory
I will use the concepts of disrupting technology and appropriated technologies when
interpreting Kazaa and file sharing services.
Disrupting technology
Harvard Business School professor Clayton M. Christensen has brought forth one theory that
tries to explain the effect of new technologies, or business models, on incumbents.
Christensen describes competition due to new disruptive innovations (disrupting technology
and disrupting innovations are oftentimes used synonymously) that lead to a decline in
incumbent’s market shares. Traditionally, disruption occurs when incumbent firms overshoot
the needs of their customers by introducing services with more features than usually needed
by most customers. This creates a demand for products that are cheaper, easier, and more
convenient to use, but still acceptable for most users needs. Incumbents often want to include
more advanced features to be able to resell one product several times. One example is
Microsoft’s Office software, because most users do not utilize all of the available features
(Christensen, 2001: 5). This creates an opportunity for other firms to compete with cheaper,
more easy to use software.
There are three tests that need to be addressed to determine if a technology is disruptive. First,
does there exist a growth opportunity? A new disruptive technology usually thrives outside
the mainstream market or when it appeals to customers that are over served in the mainstream
market, by the lesser cost of the product. Some other aspect of the technology might attract
customers despite its limitations. The second test is if the disruptive technology can attract
customers away from the mainstream market? Disruptive technologies need to be a good
enough substitute for the market leader. They need to meet some minimum requirement of
performance. The third test is if the incumbent can respond to the disruptive technology.
Generally, incumbent firms are not interested in disrupting technologies because disruptive
products typically generate lower margin per unit sold. Therefore they are not financially
interesting for incumbent firms.
According to Christensen, incumbents have three options when responding to disruptive
technologies. First, they can try to ride the wave by investing in startup companies that are
using disruptive technology and thereby profit from the process. Second, they can try to coopt the technology by taking hold of the disruptive technology and introduce it to the
mainstream market and fit it within its existing business model. Third, incumbents in a
regulated market can try to block disruptive technology from ever getting to the market
(Christensen, 2001: 37-38).
Appropriated technologies
The appropriation of technology occurs when “people outside the centers of social
power…have been able to use materials and knowledge from professional science for their
own kinds of technological production” (Eglash, 2004: ix). Examples could be the
appropriation of record players by hip-hop artists when they “scratch” records, or the
appropriation of automobile shock absorbers turning them into shock producers by Latino car
mechanics for low-rider cars. The appropriation of technology generally yields new functions
and meanings to existing technologies, either by using technology in a new context, by
adapting it for new uses, or reinventing it to change the structure of the original artifact
(Eglash, 2004: xi). The appropriated technology needs to be flexible in that it can be used for
many purposes, and the appropriation should involve a violation of the technology’s intended
purpose.
According to Eglash, appropriated technologies can play a role in democratizing science and
technology by benefiting marginalized groups in society (Eglash, 2004: xvii). Corporations
8
can in turn respond and discourage appropriation by making products that are less flexible to
appropriate, i.e. to make products that are difficult to use for other uses than the intended.
9
Background
This section will discuss historical reactions to new technology within the media industry, the
technological development that has led up to file sharing networks and a specific description
of the Kazaa network.
Historical reactions toward new technology
Obviously the introduction of new technology that is perceived as threatening to rights
holders is nothing new to the entertainment industry. The manufacturing of piano rolls for
player pianos without permission from composers led to a court dispute in the early 20th
century. In White-Smith Pub. Co. v. Apollo Co., 209 U.S. 1 (1908) the Supreme Court ruled
that piano rolls did not infringe copyright, partly because this issue had not been addressed by
Congress. Instead, the US Congress gave composers the right to control mechanical
reproductions of their work, but imposed a compulsory license so that anyone could record a
previously recorded song as long as they compensated copyright holders by paying the license
(Samuelson, 2004: 19).
Radio is another innovation that is used for distributing music for free, providing that a
receiver is available. When radio was first introduced, stations played records without
compensating artists other than paying for the cost of the record played (Chanan, 1995: 60).
Record companies soon realized that they were missing out on a potential source of income.
However, they also understood that litigation would set them back financially, and radio
provided an opportunity for advertising their products. A blanket license solution, which
included royalties to songwriters, was later adopted for music played over the radio (Chanan,
1995: 85).
Video tape recorders caused a similar problem. Film industry members Universal and Disney
sued Sony in 1976 over their home recording device called Betamax. They claimed that Sony
was liable for copyright infringement because VCRs enabled people to record television
programs and movies that were subject to copyright. This case eventually ended up in the US
Supreme Court. The Supreme Court ruled that the VCR did not violate copyright since it had
substantial non-infringing uses, such as taping shows for watching at a later time. This was
named taping for time-shifting purposes. The importance of this case has been that copyright
holders cannot control new technologies as long as there exist substantial non-infringing uses.
However, this case would prove to be beneficial to rights holders since the VCR enabled an
additional business model for the film industry. Now they could rent and sell movies on video
before they got on TV. The industry adapted to the opportunities rendered possible by new
technology (Spinello, 2003: 85).
Kazaa is not the first peer-to-peer application that has been used for sharing MP3s. The first
application to cause a debate about file sharing and also the first to gain widespread use was
Napster. Napster was created in 1999 by Shawn Fanning, a young student at an American
university, and transformed into a company in the same year. The Napster service made it
possible to search for and download songs from other users of its MusicShare software. The
architecture was a cross between a client-server application and a peer-to-peer service since
Napster had a centralized server with a list of available songs, but the actual sharing of files
went straight between users. The MusicShare software was free of charge and once it had
been downloaded it was possible to make use of the service. The user decided which songs to
share by placing them in a Shared folder, and the names of those files were then uploaded to
Napster’s server, although the actual content remained on the user’s computer (Spinello,
2003: 81-83).
Since the actual software and service was free, Napster had to look elsewhere for income.
Possible models for revenue were through advertising, information about popular downloads,
sponsorships and subscription fees. Napster quickly became very popular and in July 2000 it
10
had over 21 million registered users. This attention inevitably also caused the interest of the
recording industry and several lawsuits were filed. There were talks between Napster and the
major record labels about working out a way of using Napster to distribute music, but nothing
ever materialized. In December 1999 the RIAA (Recording Industry of America) sued
Napster on behalf of the five (at the time five, later four) major record companies. This was
the lawsuit that ultimately caused Napster to employ a filtering system for search requests so
that copyrighted material was to be protected (Spinello, 2003: 81-82).
Record companies argued that the files available on Napster were in fact, almost exclusively
copyrighted material and that users of Napster were guilty of copyright infringement. In
addition to that, Napster was liable for contributory copyright infringement as well as
vicarious copyright infringement, because Napster facilitated these crimes and profited
economically from them. Napster defended itself by claiming that it was only a search engine
for music and that a substantial amount of the files traded among users were consistent with
fair use, or files that were not protected by copyright. Users could for example sample music
before purchasing or download a copy of a song they already owned on a CD (“space
shifting”), making Napster more like a radio station. Napster also tried to make references to
the Sony v. Universal trial about the non-infringing uses of the VCR. The court did not
approve of Napster’s defense and the case ended in the Ninth Circuit Appeals Court in March
2001 with Napster having to block access to content that violated copyright. Until these
changes were to be implemented Napster could continue its service. In July 2001 Napster shut
down to install a filtering system (Spinello, 2003: 84-86). BMG, the record company, showed
an interest in Napster by loaning them money to develop a system that compensated copyright
holders and also tried to acquire Napster. Due to legal reasons they had to opt out of this and
instead Roxio, producers of software for CD burners, bought the Napster brand name and
transformed it into a music subscription service. The subscription based Napster service
(Napster II) that later surfaced has nothing to do with the original Napster (Burkart and
McCourt, 2006: 59-62).
Technological innovations
There are several technological breakthroughs that make the sharing of music possible
between users on the Internet. Among these is the MP3 format, which is a technique for
compressing digital audio so that the size of the file becomes much smaller than the original.
Using the bit-rate 128 kbps, a file is compressed to a 12 th of its original size. Although the
resulting file is of inferior quality when compared to a CD, a survey by Bhattarche, Gopal and
Sanders show that 90% of respondents rated compressed music almost as high compared to
CD quality (2003: 109). With broadband connections to the Internet like ADSL, T1 and T3 it
is possible to transfer a great amount of data between computers facilitating the distribution of
music files. Another factor is computers equipped with large storage capacity and audio
playback. Today most computers are equipped with hard disks that can handle over 100 GB.
Most computers also have soundcards and cheap speaker systems for audio playback.
Furthermore CD- and DVD-burners for storing music files are standard on most computers.
Finally free software enables a user to convert audio on CDs to MP3 files and transfer these
between computers on the Internet (Bakker, 2005: 43-44).
Peer-to-peer history and technology
A peer-to-peer computer network is a network where all participating computers (nodes) can
act both as servers and clients to other nodes, as opposed to a client-server model where
communication go between nodes and a central server. In a peer-to-peer network every node,
or peer, is connected to a number of other nodes. One application of peer-to-peer networks
has been file-sharing services where users share their files with each other over the network.
There are also hybrid peer-to-peer networks that work in a hierarchy by designating some
nodes as Super Nodes to which a number of Ordinary Nodes connect. Super Nodes keep track
11
of files available on Ordinary Nodes and also handles search requests by communicating with
other Super Nodes.
Figure 1. From left to right: Client-server network, a decentralized P2P network, and a
hybrid P2P network based on Super Nodes.
An overview of file sharing history can classify different protocols in several generations.
First, servers like MP3.com provided content online. The first P2P generation included
Napster that was a centralized network since it featured a centralized index. The second
generation included “real” decentralized peer-to-peer networks such as Gnutella. This
generation suffered from slow query times and lots of network traffic since searches went
through a large amount of nodes with every node generating traffic. The third generation
included Kazaa that solved the problems with slow search times by introducing Super Nodes
that worked in a hierarchical structure. The most recent trend has been networks like
Bittorrent and eDonkey that uses bi-directional downloads where multiple users can
download a file in fragments from different sources (Cachelogic, 2006).
Figure 2. Different music sharing services. From left to right: MP3.com, Napster, Morpheus
(A Gnutella client), Kazaa, Bittorrent.
Kazaa technology and content on the network
The technology that drives Kazaa is proprietary and uses encryption and therefore not known
in detail. In despite of this, there have been several attempts to analyze how Kazaa works.
There are a couple of reports that try to collect information about FastTrack/Kazaa. First, it
might be appropriate to clarify the distinction between FastTrack and Kazaa. FastTrack is the
protocol that regulates the communication between computers while Kazaa is the actual
application. However, Kazaa is not the only application to use FastTrack. It has also been
used by Morpheus (until 2002; Rincon, 2002), Grokster, and iMesh. Thus, the actual
FastTrack network is one large network that has included users from all of these applications.
I typically use the term Kazaa to define both the actual application as well as the FastTrack
network, and in some contexts it can mean the Dutch Kazaa company, usually noted by Kazaa
BV.
Kazaa recognizes that its users have different connections to the Internet as well as
differences in CPU power. Users are divided between Super Nodes (SN) and Ordinary Nodes
(ON) which makes Kazaa a hybrid peer-to-peer network. Super Nodes have more powerful
connections to the Internet and more powerful computers. When an Ordinary Node starts the
Kazaa application the program has a list of Super Nodes it tries to connect to. The ON then
uploads a list of files it is sharing as metadata to the SN. Typically, a SN can be connected to
several ONs as well as other SNs. The SN also has a list of files that are being shared by its
children ONs. Searching for content works by sending a request from an ON to a SN who
12
then looks through its database for possible matches. It might also forward the request to
other SNs. A search request might typically visit only a subset of all SNs, which in turn
means only a subset of all ONs (Liang, Kumar, and Ross, 2004: 4). According to Kazaa
developer Niklas Zennström, Kazaa has a very short search horizon and might only be
searching 2-3% of online nodes. Zennström continues: “If you are looking for a very rare
pianist in New Zeeland it is like searching for a needle in the haystack. If there is a demand
for this pianist there are lots of people searching for the needle in the haystack, and it is more
likely that one person finds the pianist’s file” (Zennström, 2003).
There are also other versions of Kazaa than the official one distributed by Sharman Networks.
Examples of these are Kazaa lite and K-lite. The purpose of these modified Kazaa
applications have been to remove software bundled with the original Kazaa.
A Swiss study focused on content on Kazaa from mid-2003 concluded that there were
probably hundreds of millions of files available on the FastTrack network (Fetscherin and
Zaugg, 2004: 435). However, this does not say anything about the number of unique files on
the network. Niklas Zennström explains that Kazaa, as well as other P2P networks, are
dominated by popular files similar to an 80/20-rule where 80% of the actual files are 20% of
the content (Zennström, 2003).
Figure 3. Screen shot of the GUI (Graphical User Interface) of Kazaa version 3.2.5.
13
The music industry
This section will discuss the music business and to what extent file sharing threatens the
record industry.
The music market
The three players in the music industry supply chain are content creators, content developers
and marketers, and distributors/retailers (Premkumar, 2003: 90). Content creators are artists
and songwriters. Content developers are music publishers and record companies. Distributors
are record companies as well as retailers. When I use the term content providers I am usually
referring to both creators as well as developers. The music market is basically an oligopoly
which is divided between the four major record companies: Universal with a 25.5% world
market share, Sony BMG 21.5%, EMI 13.4%, and Warner Brothers 11.3%. In addition to the
“majors” there exist a large number of independent record companies with a 28.4% global
share (IFPI, 2005a).
The music market is based on the demand for particular artists, which create monopolistic
competition of products (Grech and Luukkainen, 2005: 219). Record companies typically
work by discovering and developing musical talent with the objective of producing records
that can be sold to a potential audience. Artists work under contracts and receive royalties for
record sales while record companies retain ownership to recordings (Rothenbuhler and
McCourt, 2004: 226). Usually there are large initial costs for record companies in contracting
songwriters, producers, engineers, record sleeve artists, printing, marketing, distribution etc.
However, these costs are mostly fixed. In addition to this record companies have to pay artists
royalty and a markup to record producers and retailers. But, cost of reproduction, as in the
case of CDs, has been quite low and made it possible to cover expenses and derive income
from the selling of records due to economies of scale. Not all records become a success but
record companies usually depend on a couple of hit records to cover their expenses. A few
investments will generate vast profits above the break-even point (the fixed costs of
recording, distribution, promotion) and cover for those acts that never sell that many records.
Vogel (in Rothenbuhler and McCourt, 2004: 236) has estimated that 1 in 10 records break
even.
File sharing threatens the music industry?
The new possibility to reproduce and distribute content threatens the established business
models of traditional content producers. Some have suggested that the Internet will render
record companies obsolete, because artists no longer need record companies for distributing
their material (Rothenbuhler and McCourt, 2004: 243). According to Victor Fredell at Sony
BMG, there will always be a need for record companies that can develop artists and connect
them to songwriters. In addition to that, there is still a problem for artists to get exposed to an
audience, even on the Internet, for example on legal music services like Itunes.
The music industry has been slow in realizing the potential of Internet for distributing content,
which has lead to customers turning to alternative file sharing services that provide music on
the Internet. Many reasons have been suggested for this, such as rising CD prices, a lack of
releases by superstar artists in the early 21st century, and the reduced pressings of CD-singles
(Rothenbuhler and McCourt, 2004: 224). There also seems to be attitudes spreading among
music customers who cannot consume music the way they want to, who do not want to pay
for digital content, and regard copyright legislation as outdated (Persson, 2005). Furthermore,
a survey by Lee shows that the most important feature for users of P2P-networks is that they
charge no fees for exchanging content (Lee, 2003:51). Victor Fredell at Sony BMG
acknowledges that record companies and artists have huge public relation problems and are
often regarded as greedy. The Economist point to the trend of record companies relying on
14
short-term hits instead of developing long-lasting artists, as well as popular TV shows that
demonstrate that music can be manufactured and which consequently devalues the music
business (‘Music’s brighter future’, 2004). These factors may help to explain the increased
interest in file sharing services.
Within the music community, artist opinions on file sharing seem to be divided between those
who think it might be beneficial to the industry and those who regard it as stealing. Swedish
pop group The Radio Dept. describes that people seem to find them online which leads to an
increasing interest in the group and a larger audience at their concerts (Wallis, 2005). On the
other hand, in April 2005 artists in Sweden wrote an open letter where they claimed that file
sharing is like stealing a physical product from a store and that they need the income from
record sales to make a living (IFPI, 2005d). However, this list has been criticized. When an
investigative journalism program on Swedish TV, Uppdrag granskning, tried to get artists
from this list to put forward their views in public, the program could not get a single artist to
comply with their request (Bergsten, 2006). Maybe this was due to a change of mind in the
artist community toward file sharing services, or that they were afraid to alienate their
audience. One assumption is that file sharing affects artists differently depending on how well
known they are. P2P might be very beneficial for promoting an unknown artist, but also
negative for an established artist that will lose income from traditional record sales.
According to Victor Fredell at Sony BMG, P2P networks and file sharing pose a threat to the
recording industry when consumers are sharing files without compensating creators. The
record industry position can be summarized in this statement by Ludvig Werner, Managing
Director for Bonnier Amigo Music (Swedish independent label): “Watching a cultural
industry bleeding heavily is a very painful experience. Knowing many of the hundreds of
people who have been made redundant over the last three to four years and artists that have
been dropped, makes it even worse. We know that one of the main reasons for this is illegal
file-sharing. That is why we are determined to do everything we can to contain the amount of
music being distributed illegally. Would any business anywhere in the world react
differently?” (IFPI, 2006a: 18).
To further illustrate the damage done by file sharing, record companies points to a decline in
global music sales over the past years from $US 39.7 billion in 2000 to $US 33.6 billion in
2004 (IFPI, 2006a: 16). To demonstrate the connection between declining record sales and
file sharing, IFPI (International Federation of the Phonographic Industry) refers to several
studies and surveys by third party research companies that show that people who are
downloading music illegally are buying less music (IFPI, 2006a: 17). Oberholzer and Strumpf
(2004) have criticized these kinds of surveys since they do not recognize if people would buy
records in the absence of file sharing. There are also problems with sample data and
population, and to get a good representative of Internet users. Oberholzer and Strumpf have
showed in their own study, which is based on a sample of music downloads, that file sharing
has no statistical significance effect on record sales. The economic effect of file sharing is
small and it is estimated that it takes five thousand downloads to account for the loss of one
album sale. According to Oberholzer-Strumpf it is false to assume that most downloaders
would have bought the actual music in the absence of file sharing. The fact that music today
competes with new forms of media such as video games and Internet surfing may provide
another explanation for the drop in sales (Rothenbuhler and McCourt, 2004: 224). Thus, there
seems to be contradicting statements as to the effect of file sharing on record sales.
A regulated music industry
The music business is highly regulated due to copyright law, which control the reproduction
of content. See section on Copyright law in this paper.
15
The case of Kazaa
This section will describe the development of Kazaa.
Initial ideas
The founders of Kazaa, Swedish citizen Niklas Zennström and Danish citizen Janus Friis, met
when they both worked for Swedish telecom company and ISP (Internet Service Provider),
Tele2, in the late nineties. Zennström was responsible for Tele2’s Internet services in Europe
and was CEO of the Internet portal ‘Everyday.com’. Friis was recruited by Zennström to
manage the helpdesk at ‘Get2Net’, a Danish ISP that was owned by Tele2. During that
period, connections to the Internet were changing from dial-up to different kinds of
broadband. Zennström had noticed that Internet users were consuming more bandwidth as it
became available. A lot of the traffic was mainly from large websites, predominantly large
U.S. websites, to European users. In essence, the same traffic was continuously transported
cross the Atlantic to Europe. Zennström saw a similar phenomenon with ‘Everyday.com’. It
was costly and ineffective to have a central server that delivered traditional media content,
such as news and entertainment that they had to produce themselves and people just could
watch. It was rather dull and not at all interactive. Furthermore, it didn’t scale well, because
they had to produce different content for different markets. A web portal in Sweden could not
have the same content as a German portal for instance.
Zennström recognized that the system with a central server had a technical problem as well as
a content problem. From a technical point of view, a central server is ineffective due to the
actual cost of the servers as they are rather expensive. For every new user added there is a
need for more capacity. Therefore, there is a marginal cost for adding new users. Instead he
believed that it would be more efficient to make use of the capacity on individual users’
computers. A better scenario would be if one person downloads a file and then lets his
‘neighbour’ download from him, rather than having every user trying to download a particular
file (be it a homepage, music or video) from a central server. This would be a more
distributed network.
The content problem was that these Internet portals did not take advantage of the two-way
communication that was available. In fact, they tried to apply a sort of newspaper model in
which they published content for people to access. If there were a way to make people
contribute material it would lead to a quicker dissemination of content as well as having a
social function, people would get more involved.
Developing an application
In my interview Zennström claimed that he and Friis did not know what kind of application
they wanted to create originally. Since they did not know ahead what was going to be
successful, they decided to construct the technology to be as open and general as possible. It
could then be used as a platform for several applications. However, he states that this is the
fascination with starting something from scratch. It is impossible to know beforehand how it
will be used and sometimes that is not something you care about either. As Samuelson (2004:
17) writes: “since developers often fail to anticipate the most significant uses of their
technologies, their subjective intents, plans, or desires may be irrelevant to the actual uses”.
This is especially noteworthy since courts in America since then have ruled that the intention
of designers to develop applications that infringe on copyright can make developers liable
(Samuelson, 2004: 17).
When Zennström and Friis started working on Kazaa, Napster was already a widely used
application, although Zennström claims it was not the foremost inspiration. However, Napster
did validate two things for them. First, it showed that there was a technical solution that
worked, i.e. to utilize the computers of users for distributing content. Second, it validated the
16
social effects of a network, i.e. it spread very quickly and soon become a widely used
application for sharing MP3s. According to Janus Friis, the widespread use of Napster proved
that there was a need for a file sharing service where users could exchange files, but they also
understood the copyright related issues. When interviewed in 2000 by Danish newspaper
Politiken before the release of Kazaa, Friis explained that the objective with Kazaa was to
create an Internet-based network where artists could sell their work outside traditional
distribution channels and establish a more direct relationship with their audience (Bauer,
2000). However, Friis claimed that their motivation was neither ideological nor strictly
business. Instead the focus was on creating attractive services for consumers (Bjerge, 2003).
With Napster came the attention of the recording industry, but Zennström and Friis believed
that this situation was exactly as with other new technologies that come on a collision course
with the entertainment industry. After a period of turmoil with lawsuits the industry will start
to recognize the importance of new technology and embrace it. This happened with video tape
recorders, radio etc. Zennström believed that a system for reimbursing authors would surface,
the company that provides a service like Napster’s has to pay some percent of their revenue to
collecting societies for example. When this became a reality, Zennström and Friis would also
use their application for sharing music. That is why they made their application as general as
possible, since they wanted it to be used for other things first. One possible business model in
analogy to what they had in mind is how software companies have dealt with shareware.
Shareware is fully functioning software that people can use for free. Payment might be
voluntary or some features might be locked and can be unlocked for a fee, and this could be
applied to music on the Internet as well.
When working in Stockholm at Tele2 with ‘Everyday.com’, Zennström had problems with
recruiting software developers. This was in early 1999, and it was more difficult to find
developers to a major telecom company than to a start-up company. At that time Tele2 had
bought a couple of cable TV and mobile phone companies in Estonia. Zennström saw that
there was real programming talent in Estonia and they did not have the same hype
surrounding the Internet that Sweden had in the late nineties. After placing an ad in an
Estonian paper, Zennström came in touch with one of the developers from Blue Moon
Interactive. They turned out to be “fantastic”, as Zennström puts it, and after that he started a
development team in Estonia with people from Blue Moon as well as other people they
recruited along the way. When time came to form Kazaa, Zennström and Friis asked Blue
Moon if they would develop the technology since they believed that Blue Moon happened to
be the most competent and easy to work with software developers they had ever dealt with.
The big problem was to construct a ‘real peer-to-peer’ distributed network. Napster had been
a sort of hybrid between a client-server and P2P with a centralized index, which meant that
they (i.e. Napster) had to buy more servers when traffic increased, which also consumed more
bandwidth. The idea behind Kazaa was a complete distributed system with a marginal cost of
zero, which Zennström says, probably was the most important factor. According to him, the
intention was never to try to avoid the ‘Napster dilemma’ and escape the legal problems with
central servers that could be controlled. This was mainly something that media wrote, he
states. In fact Kazaa was already constructed at the time of the Napster legal case so that was
not an important factor at all. Zennström adds that the ability to add new users at a cost of
zero is essential to a potential business model and was further developed in his next project
Skype, which also uses the same concept of Super Nodes as Kazaa. It is difficult to know if
Zennström’s account of their intentions is a reconstruction since I interviewed him a couple of
years after the events took place. He is obviously aware of the close relationship to Napster.
Kazaa was constructed in such a way that it was possible to search for different types of files.
The idea was a much broader and a more user-friendly system than Napster’s, which Friis
considered too nerdy (Bauer, 2000). It could be used for searching for sharewares as well as
looking for Word documents, and therefore the developers wanted the ability to search for
author, subject etc. Zennström thought that it would be very difficult to compete with Napster,
17
which quickly got a large user base, and the problem with copyright remained. They hoped
for a resolution with some kind of royalty system, so that it would be possible to market
Kazaa as a music sharing service.
Development of a business model for Kazaa and negotiations
Zennström’s employer, Tele2, kept moving him across Europe, from Denmark to
Luxembourg and finally to Amsterdam where he quit his job to focus on Kazaa (Roth, 2004).
While waiting for the copyright issue to resolve, Zennström and Friis started their company
Consumer Empowerment BV in Holland. In September 2000 they first contacted the Dutch
performers collecting society Buma/Stemra (Castro, 2001). They also contacted Swedish
STIM and other similar organizations to investigate their interest in Kazaa (Wallis, 2000).
Their suggestion to these organizations was to treat every individual as a little radio station
where every person would contribute content and pay royalties for the music consumed. This
would be implemented as a subscription service for Kazaa members who would pay
according to how many times they listen to songs. It would also be possible to search for
songs that artists would put up for free as promotion without subscribing. But users would not
be allowed to listen to commercial music unless they paid.
Kazaa would collect statistics about songs that were shared and this information would be
forwarded to collecting societies that could distribute the revenues accordingly. Files would
be equipped with DRM (Digital Rights Management) to prevent piracy and would be
streamed as opposed to downloaded. This means that files shared on the network would only
be accessible to the Kazaa application, and the user would not be allowed to transfer music to
a portable music player for instance. Furthermore, Zennström believed that a certain amount
of previewing of music should be possible. In addition to this, a community-based
recommendation service was planned for users to discover new music. This feature would
recommend files by comparing one user’s playlist with songs listened to by other users
(Zennström, 2003). The objective of this version of Kazaa was to stimulate people to buy and
consume music while providing compensation to artists, instead of people using underground
file sharing services (Zennström, 2000a; Zennström, 2000b). Zennström relied on statistics by
Forrester and Jupiter Media that said that P2P users increased their purchase of music
(Zennström, 2000b). The pricing structure of the Kazaa service was not determined initially
and had to be resolved in negotiations.
At first, Buma/Stemra seemed to be very interested in reaching an agreement, as proven by
communication between Consumer Empowerment BV and Buma/Stemra (Koepman, 2000),
which explains that they were interesting in licensing content. There was even a Letter of
Intent (LOI) in place in December of 2000 with the purpose of securing further negotiations
with the goal of granting Kazaa a worldwide license agreement where members on the Kazaa
network could exchange music without being liable for copyright infringement (Letter of
Intent, 2000). However, Buma/Stemra posed certain conditions for this. For example, they
requested statistics of the usage of musical works by users and Consumer Empowerment BV
recognized this.
Zennström and Friis also contacted record labels but as Zennström explains: “it was difficult
just getting meetings if you said you were working with the Internet. They didn’t want to
meet us. We tried with their local branches first and it was extremely difficult getting
meetings with them. In case we got a meeting, they would said something like ‘Good Luck!’
and ‘Don’t come here anymore!’ It seemed to be very difficult start a dialogue with them.
There was no interest from their side”. Victor Fredell at Sony BMG in Sweden understands
this position by record companies, although he was not personally involved in discussions of
Kazaa. In his opinion Kazaa was probably regarded to be the devil and record companies did
not want to be associated with Kazaa. In retrospect, he believes that this action was probably
not a good thing and record companies should have realized the potential. Today Fredell
claims that he would probably sit down and try to find a solution and develop the idea. This
18
reluctance to negotiate from record companies was a problem for Napster as well (See section
on Historical reactions toward new technology).
Kazaa was made public in September 2000 on the Kazaa website for people to download.
Initially, public response was quite slow and there was not any marketing at all, except that
they posted links on ‘Download.com’ and other shareware sites (Goodstein, 2002). Users
were made up of people that happened to find the website. Meanwhile, Zennström and Friis
tried to negotiate an agreement with collecting societies through their company Consumer
Empowerment BV (later Kazaa BV). It was not until next year, in 2001, that Kazaa started to
grow real fast. Zennström points to several key reasons that explain why Kazaa spread
successfully. One is that word spread about Kazaa by word of mouth. Finally, it reached some
critical mass when enough people knew about it. When more people started using Kazaa, it
grew faster with more content on the network. Napster also played a part in making Kazaa
successful. In mid-2001, Napster had to install filters, which meant that some content
disappeared from the network. A speculation is that this change probably led users in looking
for another service and Zennström believes that this brought more users to Kazaa. Phil Morle,
technical director at Sharman Networks, proposes several other reasons for the success of
Kazaa. Among them are that Kazaa is extremely easy to use, that it has “powerful indexing
capabilities” meaning that it is good at finding files in a distributed environment, and that it is
a fast download client (Morle, 2006).
With users leaving Napster, Zennström was worried about the whole “Napster problem”
being exported to Kazaa, and he did not know if that would be good or bad. At the same time,
negotiations with Buma/Stemra continued during spring through fall of 2001 although the
deadline set by the LOI was not met. During negotiations the person acting on behalf of
Buma/Stemra requested information on usage and users of Kazaa, consulted Buma/Stemra’s
sister organizations around the world as well as sought approval of Buma/Stemra
management. Several draft license agreements were exchanged but no final agreement was
reached (Castro, 2001).
Conflict
The last draft agreement dates from August 14, 2001 and Niklas Zennström felt that
negotiations had broken down and that there was not any interest in continuing negotiating
from Buma/Stemra (Castro, 2001). He says that he had a feeling that there was some kind of
connection between the record industry’s success in shutting down Napster and the reluctance
to negotiate a deal with Kazaa. Zennström also felt, that the person acting on behalf for
Buma/Stemra, probably got a lot of criticism within the organization for his interest in Kazaa.
With no one to talk to at Buma/Stemra, Zennström and Friis feared that they had exhausted
their options. They continued to try and arrange meetings, but their attempts proved to be
fruitless. Because they were essentially a two-person company, and had financed Kazaa
themselves, money was also a problem. At that point the focus was just to keep Kazaa alive.
At the same time they got a lot of people using their application. To Zennström and Friis,
things seemed much more difficult than what they had imagined, and it seemed very difficult
to get a licensing deal in Europe. They had to get to Los Angeles to be closer to the major
record companies.
They also investigated the option of licensing the underlying technology, FastTrack.
Zennström and Friis hoped that other companies would consider different business models
they had not realized themselves. One potential application they imagined would be
interesting was a search engine for companies to use within the organization. According to
Zennström a lot of documents often get saved on employees’ computers instead of on a
central server. Therefore, it could be effective to have a Kazaa-like program that locates
documents on computers within a company. Unfortunately, the companies that licensed the
technology only seemed interested in applications that were similar to Kazaa, e.g. Grokster,
iMesh and Morpheus.
19
Since Zennström had the feeling that Kazaa was going in the wrong direction the ambition
now was to sell the Kazaa application and continue in developing the technology for other
business models. During spring of 2001 Zennström went to the U.S. with the ambition of
selling Kazaa and there were several parties interested. There were also, Zennström claims, a
letter of intent with a potential buyer at that time but there were terms that never got worked
out. Biddings on Kazaa continued through summer and fall of 2001 without anything
materializing. Zennström and Friis even scheduled meetings with the film and music trade
associations, MPAA and RIAA, to discuss licensing deals, but they learned that might be a
trick to subpoena them. After receiving a promise that they would not get sued, Zennström
and Friis finally met representatives from the entertainment industry, but the meeting was
according to Friis “not constructive” (Goodstein, 2002).
Instead, in October 2001 the major American record labels and movie studios filed a lawsuit
against Kazaa and the companies that had licensed the FastTrack technology, Grokster and
Morpheus. This also effectively put a stop to the interest in buying Kazaa. The day after that
lawsuit a “cease and desist” letter from Buma/Stemra was sent to the company Kazaa BV
(formerly Consumer Empowerment BV) in Holland, which said that they had to immediately
stop infringing copyright holders’ rights. Buma/Stemra pointed to three reasons for
terminating negotiations. First, certain information had been asked for by Buma/Stemra and
promised by Zennström and Friis, but had not been delivered. I believe that this might pertain
to the statistical information about usage of Kazaa described above, which would form the
basis for pricing the service. Second, they cited international actions by the RIAA against
Kazaa and Morpheus that made “discussions about the actual form and contents of a
copyright license inappropriate and relatively worthless”. Third, Buma/Stemra found it
offensive that Kazaa could be used for exchanging illegal material such as child pornography
(Castro, 2001).
I think this is a central part of the history of Kazaa. First I believe that the unclear pricing
structure and the subscription model of Kazaa is noteworthy. It is important to understand that
record companies are not used to selling music this way. Their business models are built on
mass producing and marketing physical copies of a recording (Rothenbuhler and McCourt,
2004: 244). It is possible that Zennström and Friis did not understand this completely and that
the recording industry needed time to adapt to this new business model more slowly.
Subscription services may not have looked as lucrative to content providers as their traditional
business model. Second, I believe that this statement by Buma/Stemra show the influence of
international actions against file sharing. The record industry in the U.S. had chosen a strategy
for dealing with file sharing services, which had proved successful in the Napster case, and it
would have been counterproductive to their cause if Buma/Stemra negotiated with these
‘pirates’. Therefore, Buma/Stemra might have been forced into a conflict with Kazaa. The
third reason given by Buma/Stemra does seem peculiar; I would guess that they had been
aware of the open structure of Kazaa for a long time so this should not have been a surprise.
At the same time, Zennström and Friis have, in my mind, acted naively by providing a service
that obviously could be used for exchanging music. When I interviewed Niklas Zennström he
stated that they were aware of the Napster problem and wanted to wait for some kind of
resolution and market Kazaa for other things, but for some reasons he also tried to negotiate a
deal with Buma/Stemra. In some sense Zennström and Friis put themselves in a difficult
position by providing a service that they knew was problematic and then trying to negotiate
an agreement afterwards.
The timing of these two actions made Zennström believe that this probably was orchestrated.
The problem for Kazaa BV was the Santiago treaty, an international agreement that said that
Buma/Stemra would represent copyright organizations worldwide (European Commission,
2004). According to Zennström, this agreement meant that they could not negotiate with other
collecting societies than Buma/Stemra after negotiations had begun. In essence, Buma/Stemra
had a monopoly on representing copyright holders both in Holland and worldwide, and
Zennström felt that they had not treated Kazaa fair since Buma/Stemra had not finished
20
negotiations. Therefore, Kazaa sued Buma/Stemra in Holland with Buma/Stemra
countersuing Kazaa. (For more details and a summary of court cases relating to Kazaa see
Court cases)
Altnet
When Zennström talked to people in Los Angeles closer to the recording industry he was told
that it would be impossible for Kazaa to strike a deal with record companies. According to
them Kazaa was considered to be pirates, and the only option was to start a new company
with a clean background. This way, it might be possible to get record companies interested in
licensing content. The result was Altnet, which was owned, in part by Zennström and Friis
through their company Joltid as well as by another company called Brilliant Digital. The
purpose of Altnet was to be incorporated in file sharing services like Kazaa. Distribution
agreements were also made with iMesh and eDonkey. It would then be possible for content
owners to buy key words in searching, much like how Google works. The idea is that when
people use Kazaa, they get special commercial search results (indicated by Gold files) on top
of the ones the application generates, which are sponsored by Altnet. A micro payment
system makes it possible to compensate content providers, and DRM (Digital Rights
Management) makes sure that there is no copyright infringement. The advantage for rights
holders in this case is that they can choose whether or not to sell, rent or give away content.
For example, it would be possible to give away content for free as promotion and just track
usage using DRM. Content is transferred using P2P technology, but fallback servers
guarantee a minimum download speed. Technology behind Altnet is based upon PeerEnabler,
which is a technology provided by Joltid who also controls the source code for FastTrack
(Altnet, n.d.).
The problem for Altnet was essentially the same as for Kazaa. Altnet succeeded in striking
deals with independent labels like Def Jam, Island records and V3 among others, as well as
several computer game developers, but the major record labels were not interested.
Zennström himself thought that they had done something good in building this system where
content owners could promote their content towards file sharers. But record companies
thought that Altnet was too closely connected to Kazaa. Zennström’s impression was that the
business development divisions on record companies seemed interested in Altnet, but the
lawyers were very negative. Their attitude was basically that they could not make any
agreements, since record labels were in a civil case against companies relating to Altnet.
When neither Altnet nor Kazaa managed to get contracts with the major companies they had
to find some other way of getting revenue. The solution was bundling Kazaa with different
kind of software, some of them frequently labeled ‘spyware’ by critics such as Cydoor,
Webhancer and EZula, applications that fetch advertisements from web servers and track user
habits (Cave, 2001).
New owner
In late 2001 the Kazaa interface was sold to Sharman Networks, a company registered on a
group of Pacific islands named Vanuatu. The underlying technology of Kazaa, the source
code for FastTrack, was moved to Joltid. Zennström claims that he today has no personal
relationship whatsoever with Sharman Networks, although Joltid continues to license
technology to Sharman, as well as to Altnet. Despite not making any money off of Kazaa,
Zennström says that he was happy to get rid of it.
According to Phil Morle at Sharman Networks, they have continued the efforts in creating a
business model for using P2P technology to distribute licensed content. However, Sharman
has had the same problem, as Zennström describes, with turning Kazaa into a ‘legal’ service.
They have concentrated their efforts through the Distributed Computing Association (DCIA)
and through Altnet, where Altnet’s role has been to develop technology and relationships to
distribute material from rights owners to consumers (Morle, 2006).
21
Court cases
The Kazaa application has been involved in three copyright related lawsuits: in Holland, the
US and Australia respectively. In the first Summary Judgment in Holland, Kazaa BV sued
Buma/Stemra for discontinuing negotiations, accusing Buma/Stemra of using its position as
the only organization with the permission to mediate to block a new product, which they did
not provide themselves. Buma/Stemra countersued Kazaa BV for copyright infringement
arguing that Kazaa BV allowed users of its service to exchange copyrighted material (Castro,
2001).
The outcome of this case was that the court ordered Buma/Stemra to continue negotiating as
well ordering Kazaa BV to stop its service from infringing copyright until an agreement was
reached (Castro, 2001). According to Zennström the judge in that case did not fully
understand the technology behind Kazaa, and thought that it was something like a web server
that users could download from. But, after appealing, the case finally ended in Dutch
Supreme Court, which found Kazaa BV not liable for copyright infringement of works shared
through Kazaa. During the appeal Kazaa BV withdrew its claim that Buma/Stemra should
continue negotiations (Appeal decision, 2002). In a press release following the judgment of
the Dutch Supreme Court, Buma/Stemra stated its discontent with the “illegal exploitation” of
rights holders’ creations by file sharing services like Kazaa. Instead, they emphasized that
there now existed legal alternatives to Kazaa with the likes of Itunes (Buma/Stemra, 2003).
In the United States, Sharman Networks is one of the defendants in the ‘Grokster’ case that
started with a lawsuit in October 2001 by the RIAA (Recording Industry of America) among
others. The Supreme Court decided in June 2005 that the earlier Betamax ruling should be
expanded to include the concept of inducement. This means that in order for a product not to
be liable it has to have significant non-infringing uses, and it must not be the company’s
intention to encourage users to infringe copyrights. I find this last part especially interesting
since Zennström claimed that he did not know beforehand what Kazaa would be used for. As
of April 2006, this case is ongoing and has been sent back to lower instances (Morle, 2006).
In Australia, the Australian Record Association sued Sharman Networks in February 2004.
The Federal Court found Sharman Networks as well as Altnet guilty of ‘authorizing’
copyright infringement in September 2005. The court argued that respondents had been aware
of the repeated infringement of copyright by users, although Kazaa has an end user license
agreement that advice against infringing copyright. However, the court found that this
measure is known to be inefficient. Furthermore, Kazaa lacks technical measurements that
could be used to prevent copyright infringement, such as keyword filtering. The court
assumed that these measurements had not been implemented since it would be against the
financial interest of Sharman and Altnet, who profited from file sharing due to the revenue
generated by advertising. In addition to this Sharman and Altnet have been using ad
campaigns criticizing record companies and describing file sharing as a revolution. This could
have the potential of encouraging users to infringe copyrights. However, the court also
recognized the difficulties in totally preventing the sharing of copyrighted material.
Nevertheless, the court ordered Kazaa to implement non-optional keyword filtering to any
new versions of Kazaa, as well as pressuring old users to upgrade to the new version
(Australian Supreme Court Summary, 2005).
Niklas Zennström is skeptical to the outcome of the case in Australia and criticizes the judge
for being pro-music business and someone who perhaps does not understand the technology
completely. According to Zennström, Altnet never got the chance to build its business model
and to negotiate agreements with the industry. Therefore, they had to rely on revenue from
advertisements, so called banner-ads. According to him the judge neglected the initial purpose
and just focused on the actual source of income. Phil Morle, at Sharman Networks, explains
that filtering is “extremely difficult in distributed environments on the scale that Kazaa
inhabits” (Morle, 2006). A filtering system will have to check millions of concurrent search
22
requests by users making it very expensive in terms of resources and cost. This would
effectively negate the savings of using P2P technology. In addition to this, it is also difficult
to distinguish copyrighted material from non-protected content (Morle, 2006).
In July 2006 Sharman Networks settled with the record and film industries and agreed to
compensate record companies financially as well as incorporating filtering technologies to
prevent users from sharing protected content. In addition to this Kazaa will start to collaborate
with the music industry and license content from rights holders (IFPI, 2006b).
23
Other music industry responses to Kazaa and
file sharing services in general
This section will discuss the different strategies taken by content providers when responding
to file sharing networks.
Lawsuits against file sharers
When trying to stop peer-to-peer technology, the recording industry has attempted a
somewhat unique strategy. In addition to targeting the actual file sharing services through
legal actions, they are also targeting individual consumers. In 2003 the record industry started
bringing lawsuits on illegal uploaders of protected material in the U.S., which have continued
over the years and in 2004 several European countries followed. Since March 2004 there have
been several global actions against file sharers including one in November 2005 which
targeted 15 cases in Sweden of users on several networks, e.g. Kazaa, BitTorrent, Direct
Connect, eDonkey among others (IFPI, 2005b).
Spoofing
Cachelogic has been measuring P2P activity and concludes that users are declining on the
FastTrack network (Cachelogic, 2006). This could obviously be a consequence due to the
litigation against Kazaa and other services on the FastTrack network, as well as lawsuits
directed at individual users of Kazaa. However, Phil Morle at Sharman Networks believes
that this is instead caused by fake files on the network (Morle, 2006). These fake files could
either be mislabeled or corrupted by mistake, or deliberately decoys called spoof files. A
famous example is when a file pretending to be the Madonna song “American Life” spread on
P2P networks. The track contained a voice message from Madonna berating downloaders for
using file sharing services (Christin et al, 2005). The existence of fake files on P2P networks
has been researched in for example Liang et al, 2005 and Christin et al, 2005. Liang et al
found that fake files are common on the FastTrack network. In addition, they conclude that
this pollution is intentional. Interestingly, Wired reports that companies such as Overpeer are
being hired by record companies for spoofing P2P networks (Maguire, 2003). Results from a
study by Edström-Frejman on Fasttrack show that hit songs by popular mainstream artists
such as Britney Spears and Eminem are heavily spoofed, in some cases all search results turn
out to be spoofs (2005: 938).
Record companies on the other hand are very reluctant to comment on spoofing. However,
Victor Fredell at Sony BMG, admits that BMG Sweden before the merger with Sony did use
spoofing. Currently, Sony BMG in Sweden does not use traditional spoofing, since they do
not believe that it works. Nevertheless, they were considering (in December 2005) to test a
new strategy where they would spread files that pose as ‘real’ songs on P2P networks, but
only contain the first 30 seconds of a song and the ability to link to a site where the song can
be purchased.
Record companies are also interested in P2P activity for other reasons. Companies like
BigChampagne provide services where they eavesdrop on P2P traffic, ‘sniffing’, in order to
help record companies in tracking how artists are being received by file sharers just like
consumer surveys (Howe, 2003).
Information campaigns
In order to draw attention from services that record companies regard as illegal, the recording
industry organization IFPI (International Federation of the Phonographic Industry) has used
several information campaigns in order to increase public awareness about piracy on the
Internet, for example a brochure directed at parents and teachers called “Young people,
24
Music, and the Internet” (Childnet International, 2005; IFPI, 2005c). In Sweden, webpage
Legalmusik informs about legal services for downloading music similar to the international
Pro-music campaign which is available in several languages and also informs about online
piracy and legal alternatives.
Licensing of content
Today record companies have started to adapt to the new ways of delivering content on the
Internet. IFPI claims that their new goal is to license content to as many as possible (IFPI,
2006a: 3). To begin with, record companies were initially slow to realize the potential of
Internet for distributing music which some record companies executives now seems to regret
(Nerikes Allehanda, 2006). Nevertheless, they have begun to digitize their music catalogues
and license music to authorized services that sells music online from several record
companies much like ordinary retailers. Victor Fredell at Sony BMG explains that since
consumers demand music from several record companies they do not sell directly to
customers. Instead, they work through intermediaries who license content and are free to
solve the technological issues themselves as long as they report back to the record company.
Fredell states that he will listen to suggestions about potential business models and evaluate
them since record companies do not sell content directly. Fredell believes that it is a
combination of information about legal services, which should be faster to use than
unauthorized services like Kazaa, as well as lawsuits, which have a deterrent effect, that will
make more people shop music online.
In 2005 there were more than 335 services for legal music downloading worldwide (IFPI,
2006a: 3). The most popular service worldwide is Apple’s iTunes which started out in 2003,
introduced the 99 cents per song standard, and claims to have sold more than 1 billion songs
since then (IFPI, 2006a: 7; Apple, n.d.). Subscription models like the “new” Napster are also
becoming more common in which users pay a monthly fee to access music (IFPI, 2006a: 7).
In Sweden there are several subscription-based services available, like Musicbrigade for
music videos and Homedownloads for songs. In general, the user pays a fixed monthly fee for
the ability to listen to an indefinite number of songs. However, files are only streamed and
cannot be transferred to a PC or a portable music player unless the user pays for that track. In
my mind, these services are kind of like personalized radio stations and probably similar to
what Niklas Zennström had in mind with Kazaa originally. However, these subscription
models lack the social aspect of P2P technology, with lesser interaction among consumers as
well as between record companies and consumers.
According to Sony BMG, music sales through mobile phones will get more important in the
future. Record company attitude towards P2P services also seems to be changing. iMesh and
Mashboxx are two P2P services that have been authorized by the record industry. However,
IFPI notes that there still are commercial and technological questions about licensing that
have to be resolved with P2P distribution (2006a: 14). Another service called Spiralfrog will
feature ad-supported free downloads and will debut in December 2006 according to their
website (Spiralfrog, n.d.).
Initially, prices for a song have in large part been set by iTunes that currently charge 99 cents
in the US per song. Victor Fredell believes that prices will be more differentiated in the future
depending on the artist and the song sold.
With the introduction of online music services, it is now possible to consume music in a
multitude of ways. In the days of the CD, music was first released on a CD-single that led to
the release of a CD album followed by a DVD or VHS release. Currently music is available
as individual tracks (a-la-carte downloads) with the possibility to sample before purchasing,
as ringtones, streamed music, music videos, or the traditional physical CD etc. (IFPI, 2006a:
8).
25
Investing
Record companies have also tried to invest in unauthorized file sharing services. In 2000
Bertelsmann loaned Napster money in exchange for a part of the new service Napster was
developing. Similarly, Vivendi purchased MP3.com after winning a lawsuit against the same
service. These services have been attractive to record companies due to their technological
infrastructure, as well as to the corporate identity of these firms (Rothenbuhler and McCourt,
2004: 242). McCourt and Burkart even claim that record companies have been using this as a
planned strategy to first sue Internet startup companies from deterring venture capitalists to
invest in them, and then offer funding and licensing content themselves in exchange for a part
of the company. This way they can control the whole distribution chain (in Rothenbuhler and
McCourt, 2004: 242).
DRM technologies
Record companies have started to use copy protection on CDs to protect songs from getting
ripped into MP3’s and then spread to peer-to-peer networks. There have been some issues
surrounding these. For example, they have not worked particularly well since a lot of
protected material still is available on file sharing services. In addition to this they have had
implications for consumers who have bought the CD legally and have not been able to play it
on different platforms (Bertoft, Murray DN, 2005). Another problem is the different
incompatible DRM formats, for example Apple’s Ipod does not play files using Microsoft’s
WMA DRM, only an Apple proprietary DRM format. Victor Fredell at Sony BMG Sweden
explains that they stopped using copy protection on CDs since they could not find any good
software for protection. In the future they are counting on introducing content protected CDs,
which will allow users to “rip” music to approved DRM formats.
Changes in legislation
In Sweden, legislation has been changed in order to make the downloading of copyrighted
content a crime. See section on Copyright law.
26
Discussion
According to Niklas Zennström Kazaa was founded on two ideas; the increased economic
efficiency of a distributed network and the social aspect of a network where people could
contribute and distribute content themselves, which would be more interactive compared to a
client server model. From an economic standpoint it is possible to analyze Kazaa as disruptive
technology.
From a social standpoint on technology, file sharing can be considered a case of appropriated
technology where Zennström and Friis appropriated the Internet and challenged the traditional
model for distributing content.
File sharing and disrupting technology
Internet file sharing is more and more being described as a case of disrupting technology,
even by Niklas Zennström himself (Samuelson, 2004; ‘How Skype and Kazaa changed the
net’, 2005; Burkart and McCourt, 2006: 50). According to Christensen, “disruption occurs
when an incumbent is unable to mount an effective competitive response against a technology
or business model resulting in a loss of significant market share and dramatic changes in the
competitive landscape of a market or an industry” (Christensen, 2001: 4). Christensen also
remarks that incumbent firms might be aware of disrupting technologies and even help to
develop them, but they might still be difficult to fight back. In the case of file sharing
technologies it is highly unlikely that the record industry overlooked the future of distributing
content online since several authors described it as early as in the mid-nineties (Barlow, 1994;
Dyson, 1995). As described in section Disrupting technology the three criteria for
determining disruption are growth opportunity, customer attraction despite limitations, and
incumbents’ ability to respond.
The founders of Kazaa, Niklas Zennström and Janus Friis realized the growth opportunity for
file sharing services, when they discovered that P2P technology could be used for facilitating
distribution of digital information, such as music. They realized that there existed a market for
bringing music and other material to consumers in a new fashion. The absence of a physical
container for digitized music makes it easier and cheaper to distribute than CDs. This had
previously been overlooked by the music industry, despite the rapid growth of the Internet as
well as the popularity of services like Napster, and MP3.com. When Kazaa did not manage to
secure contracts with record companies and collecting societies the service remained free. The
lesser cost of a product is obviously essential in attracting consumer interest. In fact, a study
on users of file sharing services by Lee found that the single most important feature of a P2P
service was that it charged no fee, while support of only legal files was the 25th most
important issue (Lee, 2003: 50). The record industry also overlooked the social effect of the
P2P experience, the ability to share music with friends and engaging in subcultures, which
P2P facilitates. It seems to me that record companies must have underestimated the popularity
of file sharing services initially. The growth of these services meant that there were more
content available to download, as more users bring more material.
Distribution over the Internet has certain limitations. Music files have to be compressed
which results in sound quality that is inferior to CD-quality. However, this has not
discouraged consumers who regard sound quality to be good enough for their needs. Other
downsides of file sharing are limitations in searching, possibility of fake files (spoofs), or just
interrupted or corrupt downloads. Initially this does not seem to have been a big problem with
Kazaa, as the service was described as good for finding material in a distributed environment,
simple, and a fast downloading client. Nevertheless, as fake files became more common on
the network users went looking for other P2P services. Despite regulations due to copyright,
file sharing services seems to have found an audience proved by their popularity. P2P also
scales extremely well as more users just improve the service with a greater selection of works,
27
and does not induce more cost to the provider, since there is no need for more storage
capacity or bandwidth.
Record companies have usually sold music packaged in a certain way, and apart from the
exception of singles, it has been bundled in albums. Music distributed on the Internet enables
a more diverse way of distributing music where the consumer can pick which songs to
purchase. As Mark Coleman puts it: “Album sales sag because the album format is exhausted.
People are tired of the package” (Coleman, 2003: xv). Record companies make more money
selling packaged music than individual songs due to economies of scale. Therefore, record
companies want to sell as much as possible at the same time. The profit margin for singles is
thus lower than for entire albums. I believe that this explains why record companies are
reluctant to abandon their business models. Selling music on the Internet might therefore not
have looked to be financially interesting to record companies, although it could be argued that
they should have realized the potential of selling even more music on the Internet in various
forms than physical CDs, which would make up for the loss of physical album sales.
Record companies have responded to file sharing services similar to Christensen’s three
options of blocking, riding the wave, and co-opting.
Although record companies were at first slow to respond to file sharing services they have
one big advantage over anybody trying to compete with them. By owning the rights to the
recordings they provide they can block competitors by refusing to license content or with
lawsuits if they do not abide. As seen by the case of Kazaa, this is exactly what happened.
The record industry have also pushed for stronger legislation, sued individuals active in file
sharing, used spoofing to make unauthorized file sharing services unattractive, as well as
protecting content using DRM technologies. I assume that this way they can adapt more
slowly to the technology making it fit their needs, without sacrificing too much of their triedand-true business strategies while retaining control rights to content.
Record companies have also tried to ride the wave by investing in unauthorized file sharing
services as the examples of Bertelsmann with Napster, and Vivendi with MP3.com.
Finally, record companies have started to license content thereby co-opting online distribution
and using it as an alternative to their regular business model. That is why we now can see
many authorized online alternatives such as Itunes, and in the future also services that
previously have been regarded as pirates such as Kazaa and iMesh.
File sharing and appropriated technology
The Internet is a flexible technology in that it can be used for many purposes, among them
things that were never the intention when it first was invented. The distribution of music by
reinventing the Internet for other purposes by introducing file sharing services could be
described as an instance of appropriated technologies. The power to distribute and duplicate
information was before the Internet reserved people with enough social and financial power,
e.g. publishers and record companies. On one level technology developers, such as Zennström
and Friis, appropriated the Internet for the distribution of content. However, since they claim
that they were uncertain of the potential uses of their application, it could also be argued that
the users of Kazaa appropriated file sharing technology for distributing music. In both cases,
people outside of the music industry used the appropriated technology in order to change the
distribution of music. It can be assumed that this was attractive to consumers both
economically as well as due to the interactive features of the service.
When the music industry realized that file sharing was a potential threat to their business, they
responded among other things by making their content less susceptible to flexibility, i.e. to
use DRM to prevent copying. That way they use their power over content to insure that it is
not getting to the public in a way that is against their interests. File sharing on the other hand
turns distribution of information from a hierarchical one-way model where information flows
from the top represented by record companies to the public, into a model where information is
28
passed among the public. It could be argued that this is a more democratic way of distributing
content which is not affected as much by record companies control and marketing for
instance. It could also be an attempt to regain access to a common cultural heritage that is
perceived to be controlled by major corporations such as record companies. I assume that
record companies want to act as gatekeepers, controlling which artists that are promoted and
P2P networks are not as easy to control as the physical market where they already control
distribution.
29
Conclusions so far
Based on the information from the case study the conclusion is that content providers are
anxious to control their content, as seen by their initial reluctance to license content and their
strategies for blocking file sharing services. Disrupting technology theory describes
opportunities of new technology and reactions to it, where the record industry first seemed
reluctant to reach agreements with file sharing services but have adapted to them over time.
The case of Kazaa seems to follow the pattern of disruptive technology that can be compared
to other examples in history of controversy between content providers and technology
developers, like the Betamax case. Disrupting technology clearly explains the different
strategies used by content providers in order to prevent technology that might seem
detrimental for their business.
Both IFPI and a representative from Sony BMG now claim that their current goal is to license
content. This strategy has not been used fully throughout the past years, as evident by the case
of Kazaa. Today’s copyright law leads to a dominating position for the record industry that
may be unfair to technology developers, in the sense that content providers can stop services
that they feel are not beneficial to them, despite the obvious demand for different distribution
models. There might be a risk that developers will refrain from trying to develop new ways of
distributing content if the record industry can stop technologies that they believe are negative
for their business models, especially if they later decide to adopt that technology later on their
own terms. This could in return affect consumers negatively by making music inaccessible. In
that sense, the success of unauthorized file sharing services could be seen as an attempt to
counteract this imbalance by using technology as a means for accessing music. However, the
consequence of rights holders’ control of content is that new technology suffers since the
record industry sees problems with P2P technology. The testament to this is that there is not
that many authorized file sharing services based on P2P, despite the fact that it has several
key advantages compared to a client-server structure, e.g. being more efficient.
This study of Kazaa also finds that social structures that exist in the physical world also
transforms to the Internet. This means that the structures of power that dominate society,
where financially strong actors control the dissemination of information by controlling the
means for production and distribution, is also evident on the Internet despite its inherent
openness. The development in the case of Kazaa and other file sharing services point to a
trend where the same financially strong actors that are present in the physical world are
heavily controlling the Internet.
The next issue is whether this imbalance in favor of content developers is justified. Although
actions by content providers have proved to be legally justified it is unclear whether they are
morally justified. If we find that there are strong arguments for intellectual property then this
imbalance could be justified, but it has to be examined further before we can draw any
specific conclusions. The next part of this thesis will discuss if a philosophical description of
ownership to music, based on John Locke’s natural rights perspective on property, differs
from copyright law.
30
II. Philosophy
Introduction
Mr. Smith is a musician who writes his own music. Recently he has put out a record of his
best work. Mr. Brown is a music lover who by chance happens to like Mr. Smith’s music.
But, instead of legally purchasing he downloads Smith’s record from Kazaa. After hearing of
this Mr. Smith is infuriated by Mr. Brown’s action and accuses him of stealing property,
arguing that file sharing is like stealing a CD from a record store. Furthermore, Mr. Smith
maintains that society should stop Mr. Brown from sharing his music online.
This part of the thesis will examine what rights of an ownership account that can be justified
for immaterial objects according to the natural rights perspective. That way it is possible to
determine what rights Mr. Smith is entitled to and if he is justified in his accusations. The
possibility to digitize music brings about an interesting change in the need for physical
representations. Although the music itself has not changed, our attitudes towards music as
property might adapt to the ability to digitize content. This analysis will show to what extent
we are justified in this.
The analysis is organized in the following way: First is a description of Swedish copyright
law with the intention of showing the rights granted by today’s legal system. Next is a
traditional characterization of physical ownership following Honoré’s work to be able to
compare copyright with physical property and a discussion about the special traits of
intellectual property. Copyright is then compared to the traditional account of ownership and
the rights that seem to be violated by file sharing are singled out. There are several moral
foundations for ownership, but only utilitarianism and the natural rights perspective are
presented here. In addition, arguments are made as to why this report will focus on the latter
as a normative starting point in the article. The next section will give a description of a natural
rights theory on property based on the writings of John Locke and identify five parts of it that
will be analyzed. The idea is to check if these parts also work in the immaterial world and if
they support the relevant ownership rights that are violated by file sharing. The hypothesis is
that the ownership rights in copyright legislation are not fully supported by Locke’s theory.
Material to support the philosophical analysis on ownership comes from the extensive
literature on ownership and intellectual property. In addition to studying the relevant literature
I have attended a series of seminars at the Swedish think-tank Timbro on liberalism and
copyright.
31
Property
Copyright law
Why do we need an understanding of copyright law in order to discuss ownership? The
answer is because we want to know what rights of copyright that conflict with file sharing.
Adjacent areas of intellectual property are patent law, trademarks, and trade secret, but I will
not concern myself with these subjects here. In this section I will give a brief account of
Swedish copyright law, but the focus of this essay is not necessarily on Sweden. However the
purpose is to give a description of typical copyright law since it is mainly determined by
international treaties. There are two important treaties today with the objective of making sure
that countries give protection to foreign works. The first one being the Berne Convention for
the Protection of Literary and Artistic Works which have been ratified by approximately 150
countries and is administrated by the World Intellectual Property Organization (WIPO). The
Berne Convention contains provisions about the minimum protection to be granted. The
second one is the TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement
by the World Trade Organization (WTO), which is mainly concerned with the legal aspects of
intellectual property. Sweden has ratified both treaties, which means that Sweden has an
obligation to give protection to works by foreign authors according to Swedish law. Two
WIPO treaties from 1996 specially address protection of works on the Internet. They are also
the origin of an EC directive, which in turn is the foundation for the revised Swedish
copyright law that was implemented on July 1, 2005 (Ministry of Justice, 2006: 17).
The Swedish copyright law regulates authors’ rights to their works in Sweden but includes
much of the above-mentioned treaties. The copyrights law treats artists, composers, authors,
and other “creative persons” equivalently. The law only protects authors’ expressions as
opposed to the underlying ideas, i.e. there is a distinction between idea and expression. For a
creation to be recognized by the law as an artistic work it needs to have attained the high
standard required of a work. This means that it has to be a unique and original expression.
Protection is granted to a work automatically, there is no need for registration.
The copyright law consists of two basic rights: economic rights and non-economic
rights/moral rights. These rights are only assigned to the originator, although the economic
rights may be transferred or licensed. The economic rights enable the originator to control
reproduction of the work and the right to make the work available to the general public. It is
the originator that decides if the work is to be reproduced and the different methods of
copying do not affect this right. It is possible to make a work public in many forms such as by
radio or TV-broadcasts or transmission on the Internet. Another opportunity is by a public
performance for example a concert, by public display without a technical aid, or by public
dissemination when a work is sold, rented, or borrowed. The non-economic rights include the
right to be mentioned when the work is used and the right to be protected from uses or
alterations to the work that might damage the originators artistic reputation or character.
These rights may not be transferred but an originator can voluntarily reject them.
There are certain limitations to the copyright law. It has a limited duration and expires 70
years after the author’s death. After the expiration of the term of protection the work is
publicly available and may be used freely, this applies to both the economic and noneconomic rights. It is also possible to make a couple of copies of a work for fair use, for
example by burning a copy of a CD one have bought or borrowed. However, computer
software and databases are excluded from this. In order to compensate authors for the
substantial amount of copying that is made by fair use, there is a blank tape levy on material
that can be used for copying, such as blank audiocassettes and CDs. Importers and
manufacturers therefore pay a fee on those products to an organization which in turn forwards
this money to creators (Privatkopieringsersättning, n.d.). Crimes against copyright law can be
32
punished either by fines or imprisonment for up to two years. There is also the liability to pay
damages to an author for the improper usage that has been made.
The revised Swedish copyright law that came into effect on July 1, 2005 has some important
implications for users of file sharing services. The original that is used for copying must be
legal. Therefore, it is not allowed to download material from the Internet that has been put
there without permission from the originator, even if it is for fair use. It is also not allowed to
upload material on the Internet, through for example file sharing programs, without the
required permission. It is not allowed to break copy protection, even for fair use, which has
been put on CD, DVD, or files on the Internet with the intent of protecting content. It is not
allowed to make tools for breaking copy protection available, be it through either sale or
rental. The only exemption to this is that it is allowed to break a copy protection if one has
legally bought the protected content, but is not able to use it due to the copy protection.
There are three important aspects of copyright legislation that we should keep in mind for the
rest of the discussion of ownership. First, the distinction between idea/expression in copyright
legislation. Second, the two basic rights of copyright, i.e. the economic and the moral rights.
Third, copyright expires and is restricted by fair use. The next step is to explore how
copyright fits a philosophical description of ownership
The ownership of property according to Honoré
In this section I will try to find the rights that constitute ownership to physical objects.
One way of looking at property is to regard it as things. It might be as different objects as
bicycles, guitars or houses. With today’s legal system immaterial objects such as songs and
patents are also recognized. Another way of looking at property is to view it as relations
between persons with respect to different objects. This is the standard view in contemporary
philosophy of property. The American legal philosopher Wesley Newcomb Hohfeld focuses
on property as relations rather than things. He has classified eight concepts, including claimright and duty for example, and the connections between these concepts called the
Fundamental Legal Conceptions (Munzer, 1990: 17). The Hohfeldian analysis does not say
anything specifically about the actual rights and duties that ownership consists of, only that
any description of ownership will include these concepts.
The legal philosopher Tony Honoré draws on Hohfeld’s concepts of claim-right and duty in
his analysis of ownership. Furthermore, he defines which type of claims and duties an owner
has. According to Honoré ownership is defined as “greatest possible interest in a thing which
a mature system of law recognizes” (Honoré, 1987: 162). This interest can then be broken
down into eleven different elements that together form the sticks in the bundle, which
constitute ownership. All items are not necessary but together they can be seen as sufficient.
Honoré’s article also concerns cases in which several individuals have interest in an object
and when there are problems with settling an ownership. It might be the case that an owner
grants certain rights to another person, this is the case with rentals, but without giving up
ownership. Honoré writes about the liberal concept of property, but he notes that even the
former Soviet Union with its communist system allowed some private property. In that case
there were certain limitations on objects allowed to be owned. Obviously there are several
alternative ways of dividing up the concept of ownership. Some examples are Lawrence C.
Becker’s attempt with a list of thirteen elements and Frank Snare’s list of six elements
(Hansson, 1994: 53). Although slightly different, these lists are mostly similar to each other
and I will limit myself to Honoré’s analysis since it is the most well-known and influential
expression ownership. One important thing to note about Honoré’s list is that some of the
incidents on it overlap slightly depending on interpretation. For example, the right to use
could include the right to decide who gets to use an object and also the right to income, but
could also be interpreted as just personal, everyday use.
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The elements that constitute full ownership according to Honoré are (1987: 166-179):
1) The right to possess
The right to possess implies an exclusive physical control of the object. If Mr. Smith
owns a car he has the control of it and the power to exclude others from possessing it
without his permission.
2) The right to use
My interpretation of use refers to the personal use of an object and implies that the
owner to an object has the right to use an object according to his or her wishes. Mr.
Smith typically can use his car for driving only back and forth to work or for street
racing if that is his wishes (providing that street racing is legal).
3) The right to manage
The right to manage is the right to decide who will have the option of using the object
and the area of usage. Mr. Smith may permit his neighbor Mr. Brown to use his car
for grocery shopping but not for anything else.
4) The right to the income
The right to benefit from the potential income one can derive from the object. Mr.
Smith can demand a fee from Mr. Brown for the occasional use of Smith’s car.
5) The right to the capital
The right to alienate the object by sale or gift and to consume, leave to waste, or
destroy the whole or parts of the object if one so wishes. Mr. Smith has the right to
scrap his car if he wants to but he can also sell it to Mr. Brown, thereby transferring
either full ownership or just some rights like a right to use to Mr. Brown.
6) The right to security
The owner cannot be deprived of his or her property. Mr. Brown may not take Mr.
Smith’s car without his consent. There are exemptions like expropriation by the
government see 10).
7) The incident of transmissibility
An object might be bequeathed to heirs. Before Mr. Smith dies he can transfer the
ownership of his car to Mr. Brown in his will.
8) The incident of absence of term
Ownership is not limited in time; therefore there is no terminal point. Exemptions to
this are patents and copyrights. There will not come a day when Mr. Smith ceases to
own the car, provided he does not transfer it to somebody else or scraps it.
9) The duty to prevent harm
This is a restriction on the right to use, which means that is not permissible to use
one’s property in a way so that other persons are harmed. Mr. Smith is not allowed to
use his car to run over Mr. Brown.
10) Liability to execution
Failure to pay one’s debt might result in expropriation by the government. If Mr.
Smith is unable to pay his phone bills, the government might expropriate his car in
order to settle his debt with the phone company.
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11) Residuary character
The owner has the remaining rights that nobody else has interest in to an object when
there are several interests in an object. Mr. Smith might decide to rent his car to Mr.
Brown in exchange for a monthly fee. Mr. Brown now effectively has the right to
possess and the right to use the car. However, just because Mr. Brown has several
interests in the car we would not consider him the owner of the car. It still belongs to
Mr. Smith and when Mr. Brown’s interest terminates, he might decide he no longer
needs the car, his rights return to Mr. Smith.
Immaterial objects
Honoré’s analysis is fairly straightforward when applied to physical objects, such as cars and
houses, but he believes that there is a close analogy between copyrights and ownership to
physical objects (1987: 181). But with copyrights, ownership is expanded to all physical
copies of a work and not just a single instance. Does this also imply that there is no difference
between immaterial objects and physical objects in terms of their properties?
A discussion about immaterial objects is often affected by definitions of intellectual property.
A general definition describes intellectual property as a product of cognitive processes and as
“nonphysical property which stems from, is identified as, and whose value is based upon
some idea or ideas” (Hughes, 1988: 297). Thus, intellectual property seems to originate from
ideas. But, what is the actual difference between idea objects and physical objects? One
important characteristic of immaterial objects is that several individual may use them
concurrently and independently of each other. Immaterial objects therefore lack the
exclusivity inherent in physical objects. For example, if Mr. Smith comes up with a recipe for
a new strawberry pie it is possible for a large number of other individuals to possess and use
this recipe (not the actual paper it is written on but the content) without Mr. Smith losing his
ability to use the recipe. But, if Mr. Smith buys a new car it is not possible for Smith’s
neighbor, Mr. Brown, to use it without Mr. Smith losing his ability to use the car. This nonexclusivity is, in my opinion, what separates immaterial objects from their physical
counterparts.
There seems to be several areas of immaterial objects (e.g. books, paintings, musical works),
but I will only focus on music. How is one then to characterize music and recordings? Is it
only the abstract term music (maybe meaning the metadata such as notes and chords) that is
an immaterial object or can a musical recording also be said to be an immaterial object?
Music is based upon ideas that are then materialized in a physical recording. Recordings are,
on the hand, not limited to existing in a single physical copy. Many individuals may use and
possess a recording much like the pie-recipe mentioned above. The existence of the Internet
and the present-day peer-to-peer technology has made it possible to duplicate recordings at a
cost of zero and to spread it on the Internet to an unlimited number of people. Recordings can
therefore be said to have the immaterial object’s characteristics and be treated as one.
To conclude, the important characteristic of immaterial objects is that they are based on ideas
and are non-rivalrous. Recordings of music can be classified as immaterial objects since they
have those characteristics.
Which ownership rights does file sharing violate?
File sharing is in conflict with copyright when it comes to people sharing protected material
with each other without compensating artists, i.e. when the effect of file sharing is negative on
artists or authors in some way. This could be both violations of the economic and the moral
rights of copyright. What we are interested in is how artists’ usage and ability to derive
advantages from an immaterial object is affected by file sharing. However, it is my opinion
that the moral rights are not that relevant for this discussion, mainly because file sharing does
not alter works. Neither is creators not credited for their work, and although files on file
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sharing services may be mislabeled quite often this can hardly be seen as the cause of
controversy. Instead I believe that the conflict is due to the lack of financial compensation as
well as works being released without the permission by its creator, i.e. the right to make a
work available. For example, when heavy metal group Metallica learned in 2000 that their
unreleased song ‘I Disappear’ was available on Napster they initiated legal actions against
that network which eventually closed down Napster (United States Senate Committee on the
Judiciary, 2000).
Not all of the elements on Honoré’s list are central to the economic rights granted by
copyright. What I want to do is to relate the philosophical description of property to
copyright. The next task is to isolate the specific elements of Honoré’s analysis that have a
substantial relevance for violations of copyright due to file sharing.
Out of the 11 elements on Honoré’s list, items 1-5 concern usage and the ability to derive
advantages by ownership. However, I will disregard the right to capital (item 5) since I find
the right to sell an object closely related to the income aspect, and because the right to destroy
an object is not relevant in the case of music, although it might be true that there exists such a
right. Moreover, I find item 6 (right to security) implied by for example the right to possess.
Items 7 and 8 that regulate the transmission and duration of copyright are not directly affected
by file sharing. Neither are items 9 and 10 that concern certain limitations to copyright, as
well as the residuary character (11), which concerns the remaining interest in an object. Thus,
the only incidents that I believe are relevant with respect to the discussion of file sharing are
the right to possess, use, manage, and derive income (1-4). The next step is to examine
elements 1-4 more closely to check if they conflict with file sharing.
The right to possess and the right to use is not necessarily in conflict with file sharing as long
as the original author is not prohibited against possessing and using his or her creation. Since
multiple individuals can use immaterial objects concurrently and since file sharing does not
prevent the original author from controlling a personal copy, I conclude that the right to
possess and the right to use are not in conflict with file sharing. In order for Mr. Smith to fully
enjoy his car he needs to be able to control and use it whenever he feels like it. But, in order
for Mr. Smith to enjoy his recipe for a tasty strawberry pie he only needs his copy of the
recipe, he is not affected if his neighbor Mr. Brown decides to use another copy
simultaneously. The problem with file sharing is not that the original author is prevented to
use his or her creation. Obviously, there might be a problem if Mr. Brown steals the recipe
from the originator, Mr. Smith, and publishes it in a journal without Smith’s knowledge. The
right to manage property deals with this problem.
The right to manage gives the author the right to control an object and its uses. This creates a
problem with unauthorized file sharing since copies are made without the consent of the
author who might want to control the reproduction of a work. There might be artistic reasons
for this, like not wanting a work to be spread at all (the right to make a work available) or to
make sure that a work is not used in specific contexts (the protection against certain uses of
one’s creations). There could also be economic reasons since a source of income for artists is
the selling of copies of a work. In that sense, the right to manage is on the borderline between
the economic rights (the right to control reproduction and to make a work available) and
moral rights (the protection against certain uses of one’s creations) of copyright and
consequently I will only focus on the economic part. The control of the reproduction of a
work is also closely related to the right to income since an artist profits by selling copies of a
recording.
The right to income is traditionally understood as a substitute for using the object, as with
physical property (Honoré: 1987: 169). The difference with immaterial objects is that the
originator is still at liberty to use a copy of his or her work although many others are using
their copies simultaneously. However, with copyright the income right is more of a
compensation for work done. The right to manage and the right to income both correspond to
the economic right of copyright law, where the right to manage is both the right to make the
36
work available and the right to control the reproduction of a work. The right to income
specifically applies to the right to derive income from selling copies of a work. This is also
challenged by unauthorized file sharing services.
I think that it is important to note the close relationship between the right to manage and the
right to income in the music business where the prominent business model is to sell copies of
a work and so these two rights happen to overlap. Hence, the only ownership rights that have
direct relevance for a discussion of file sharing as a violation of intellectual property seems to
be the right to manage and the right to income. Consequently I will examine if it is possible to
justify these rights with an ownership theory. In the next section I will discuss why I will
choose the natural rights perspective as a normative starting point for further discussions.
The moral foundation of copyright
This section is occupied with choosing a tool for analyzing if the right to manage and the right
to income are justified for immaterial objects. There are two important perspectives behind
justifications for ownership, the first being based on utilitarianism and the second based on
the thought of natural law. There are other theories when it comes to justifying property. One
example, derived from Hegel and Kant, is that private property is needed to satisfy some basic
human needs. Another theory presented by William Fisher is a Social Planning Theory with
the objective of creating a just and attractive culture (2001: 192). I do not perceive either one
of these as especially significant in literature or frequently used.
A utilitarian theory states that acts that yield good consequences are morally justified. Good
consequences are interpreted as those actions that maximize some value in society. This
implies that we must choose a value that could be measured. Another important part of
utilitarianism is that it is impartial, every individual counts as much as everyone else. A
common way of selecting a value is to adopt a wealth-maximization criterion. The
government’s intention is a system, which increases the citizens’ ability to pay for goods and
services (Fisher, 2001: 177). Oftentimes arguments for copyright law are based on incentive
arguments. It is thought that there are certain incentives needed for people to create. This is
expressed in an article by several Swedish politicians including the former Minister for
Justice Thomas Bodström where they write “to stimulate the creative will of individuals is
important” (Bodström, Larsson and Stafilidis, 2005; quote translated from Swedish).
Copyright protection could be an incentive since it creates a monopoly for the originator and
the promise for future income. Without this protection there would exist an opportunity for
people to profit by copying other people’s work instead of contributing themselves. Increased
copyright duration is believed to induce more works produced, but only up to a certain point.
It is then thought that the production of works create social welfare for society. However,
long copyright duration will lead to increasing administrative costs and higher prices on
intellectual products that might still have been produced in the absence of copyright.
Copyright duration is therefore a tradeoff between the utility of more works produced and the
increasing costs (Fisher, 2001: 178). On the other hand, if all works were free to use there
would be an increased utility since more people would be able to use them. Utilitarianism has
to deal with this balance as well.
A utilitarian theory is logical to apply, but there are certain problems attached to it, especially
connected to my relatively small study. It is difficult to gather all the necessary information
and to identify and assess the consequences of different actions, such as shortening copyright
duration or to allow file sharing services. It is not meaningful to do a utilitarian study unless
one has close to full knowledge of a situation, which I do not have. Since this theory will have
to consider so many factors, e.g. consumer behavior and the music market, it will not be that
intuitive either, more probably it will be rather complex. It is also possible to object to the
wealth-maximization criterion as the most fitting value to maximize.
However, despite the above difficulties with utilitarianism I believe that a utilitarian study
would reach some conclusions that do not necessarily support today’s copyright system.
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Different business areas covered by copyright need different amount of incentives. Film
production is probably in general more expensive than making a record, which in turn is more
expensive than writing a book. Therefore, a filmmaker most likely needs greater assurance
that he will be able to recoup the cost of investing than a writer will. If it is true that a cheaper
production requires fewer incentives, then copyright law should reflect this, which it does not
today. On the other hand, not all film productions cost the same either and a system that
would grant different protection depending on the cost of production would be complex.
Another factor to take into consideration when applying utilitarianism is that times change.
The system that maximizes wealth today will probably not still be the most efficient in ten
years as the market changes, new technology develops, and consumer behavior evolves. This
will apply even if we have full information of both scenarios. It seems natural that the law
adapts to changes in society, but on the other hand it goes against our intuitions of ownership
as something long-lasting.
The natural law perspective proposes that individuals who labour upon a resource that is
unowned have a natural right to the fruits of their labour grounded in self-ownership. This
idea is based on the writings of John Locke and is an important part of libertarianism. A usage
of Locke’s theory is easier to apply since there is no need to predict eventual outcomes of
actions. On the other hand, there are difficulties when applying Locke’s theory, since there
seem to be different ways of justifying a right to property with Locke’s theory, among them
utilitarian reasons. Locke’s theory is nevertheless interesting since it deals specifically with
ownership and is intuitively appealing. It has also played a large historical part and been a
foundation for lawmakers, especially in America. I think that Locke is especially appropriate
for copyright cases since his theory corresponds well to what creators usually mean when
they are talking about ‘pirates’ stealing property belonging to them. Utilitarianism has more
of a government perspective since it concerns what is good for society. When artists claim
that ‘pirates’ are stealing something from them, they are referring to the fact that they as
individuals are violated rather than implications on welfare in society. A disadvantage of
Locke’s theory is that it mixes different justifications for ownership. However, this does not
have to be negative as it extends his theory.
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John Locke’s theory of ownership
This section will present a version of John Locke’s theory of ownership to physical objects,
and separate the theory into smaller parts that can be more carefully examined. Locke was an
influential 17th century English philosopher who wrote about among other things property.
His arguments for justifying ownership to prior unowned objects begins with the assumption
that God left the earth to mankind collectively (The existence of a God is not a necessary
condition for Locke’s argument. One can just as easy presuppose that the earth is initially
unowned). The earth was therefore a common and ”the earth, and all inferior creatures, be
common to all men” (Locke, 2000: §27). Despite the existence of a common Locke believes
that private property is possible. God commanded man to labour for subsistence. In order for
objects on earth to be useful to mankind it is necessary to be able to work on them. This also
implies a control over the object so that it is possible to dispose of it efficiently, “yet being for
the use of men, there must of necessity be a means to appropriate them some way or other,
before they can be of any use, or at all beneficial to any particular man.” (Locke, 2000: §26),
“…and the conditions of human life, which requires labour and materials to work on,
necessarily introduces private possessions” (Locke, 2000: §35). Hence, for mankind to
survive it is essential to have the ability to acquire things. Locke writes that “God gave the
world to men in common; but since he gave it them for their benefit, and the greatest
conveniences of life they were capable to draw from it, it cannot be supposed he meant it
should always remain common and uncultivated” (Locke, 2000: §34) Obviously, several
individuals might control an area or an object and use it together in a satisfactory manner.
Locke continues his argument with stating that “every man has a property in his own person:
this nobody has any right to but himself. The labour of his body, and the works of his hands,
we may say, are properly his” (Locke, 2000: §27). This is usually labeled as self-ownership.
Because one “owns” one’s person and body, one also has a right to the labour of one’s body.
By mixing one’s labour with an object one acquires the right to that object. Locke writes that
”Whatsoever then he removes out of state that nature hath provided, and left it in, he hath
mixed his labour with, and joined to it something that is his own, and thereby makes his
property” (Locke, 2000: §27). The argument according to Locke is that one somehow joins
his or her body with an object through work. Locke writes: “It being by him removed from
the common state nature hath placed it in, it hath by this labour something annexed to it” and
“…no man but he can have a right to what that is once joined to…” (Locke, 2000: §27).
There is also a justification why labour is central to the acquisition of property. Property is
acquired if a person takes something from nature and works upon it and thereby making it
something useful. What this emphasizes is that someone takes something that has little
intrinsic value and by working upon it enhances its value. Locke writes that it is ”labour
indeed that put the difference of value on every thing” (Locke, 2000: §40). He also states that
God gave the world to the use of the “industrious and rational” and “not to the fancy or
covetousness of the quarrelsome and contentious” which implies the moral worth of labour
(Locke, 2000: §34).
There are limitations to ownership, though. It is not allowed to appropriate infinite amounts of
property. There has to be ”enough, and as good, left in common for others” (Locke, 2000:
§27). This condition has been labeled Locke’s proviso by Robert Nozick (Nozick, 1974: 178).
In addition to this there is a waste criterion that has to be fulfilled. It is not allowed to take
objects from nature that one does not use and leave to spoil. Locke writes that: ”As much as
any one can make use of to any advantage of life before it spoils, so much he may by his
labour fix a property in: whatever is beyond this, is more than his share, and belongs to
others. Nothing was made by God for man to spoil or destroy” (Locke, 2000: §31).
I see two major themes or ideas in Locke’s reasoning for granting ownership, as well as two
restrictions. The first is that I get property rights to the fruits of my labour since I own myself
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and my labour (a self-ownership argument). The second is that I can acquire property because
the labour I put into something makes me deserve a reward for the effort. This seems to imply
that labour on its own has some sort of moral worth (a labour-desert argument), and is an
additional argument independent of self-ownership. The restrictions then are the proviso as
well as the condition that objects are not left to waste. The rest of this essay will analyze if
these arguments hold in the immaterial world and if they yield right to manage income. But
first I will divide Locke’s theory in its elements. I believe that there are five important parts of
the theory that need to be discussed further and their implications for manage and income
rights to immaterial objects.
My idea is that in order for a right to manage or a right to income to be justified the selfownership argument will have to buttress them, additional support could be found in the
labour argument. But I regard the self-ownership argument to be the strongest foundation in
Locke’s arguing as well as in the liberal tradition following him, and thus labour cannot itself
be a satisfactory reason for granting ownership. I believe that Locke introduces labour to
explain why it is work that ties self-ownership to physical objects rather than just randomly
touching them for instance. Furthermore, the right to manage and income need to pass the
restrictions. If they do, the economic rights of copyright are justified according to the natural
rights perspective. My interpretation of Locke is that the restrictions have higher priority than
the arguments for ownership, meaning that if a right does not pass the restrictions it cannot be
justified. I believe that the intention of restrictions is to protect the common and it would not
make sense to introduce these restraints if they could be overridden easily.
If manage and income rights are not fully supported, or do not pass both restrictions,
ownership could be described as limited. The practical implications of a limited ownership
could be that certain rights in copyright are not justified, but that other parts of copyright are.
In that case, copyright law should perhaps adapt to this analysis. I will investigate the
following questions:
1) The common
The item that is the object of appropriation cannot be someone’s property already and
has to exist in the common. Is there an immaterial commons similar to the Lockean
common?
2) Self-ownership
Only agents who fully own themselves can appropriate property. This seems to be
self-evident. But what does an account of self-ownership look like and does selfownership support manage and income rights to immaterial objects?
3) Labour
Labour enhances the value of an object and the industrious workers should be
rewarded. Is there actually any work being done when creating immaterial objects,
like music, comparable to the labour on physical materials in Locke’s theory? How
significant is labour for manage and income rights to immaterial objects?
4) Locke’s proviso
There must be enough, and as good, left in common for others after appropriation.
How is one supposed to interpret Locke’s proviso? What is the significance of
Locke’s proviso for manage and income rights to immaterial objects?
5) Waste
It is not allowed to take objects from the common if they are left to waste. How is one
to interpret Locke’s notion of waste and what significance has waste for manage and
income rights to immaterial objects?
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A Lockean analysis of ownership
The common
One possible objection to using Locke’s theory for other areas than physical property is that
there is no “immaterial raw material” to work on similar to physical material. In that case
there might be problems with identifying an initial common in the Lockean sense. This
section will try to describe a possible “commons” for immaterial objects. My starting point is
Seana Schiffrin’s description of three types of possible commons (2001: 159-166).
The first case sees all immaterial works as existing fully developed and independent in the
common. This type of common is inconsistent with the Lockean common that sees the “raw”
materials of labour in the common. The authors then brings forth these products from the
common but do not create anything themselves. One implication of this is that there is no
labour being done when creating immaterial products other than discovering already finished
work. This first case is not that plausible when it comes to music, art, or literature since it
assumes that all works exist independently and prior to the work of the creator. It just seems
improbable that Iron Maiden’s ‘The Number of the Beast’ record has always existed, and that
it is not an evolution of music. I find it more plausible that some works belong to certain
places and time periods and could not surface everywhere. I do not believe that they could be
discovered by anyone who just happens to stumble upon them. That also leads into questions
like could anyone discover new works or is a certain education needed? Although I do not
find it plausible that entire works are just discovered, it might be true of some propositions
and facts of nature.
The second case holds the common as empty and works are completely the labour of their
author’s imagination. Consequently, music would have to be the property of its creator since
it basically would be a part of the creator’s personality. This type of common is thus also
inconsistent with the Lockean common since there would not be a common. Although this
description might seem reasonable for some kinds of abstract art or atonal music, it is hardly
appropriate for popular music that shares a lot of the same idioms. It seems peculiar to argue
that Iron Maiden completely by themselves came up with ‘The Number of the Beast’ album,
and that it has no relation whatsoever to other forms of music. It would be even stranger to
assert that songs by bands clearly inspired by Iron Maiden, like Hammerfall, are completely
the imagination of the song writers.
The third case has certain ideas and themes in the common and authors discover and put
together these themes to complete works. In this case there is a distinction between ideas and
expression, where ideas exist independently in the commons while expressions come from the
author by labouring on ideas. The immaterial raw material is found in the common and can be
viewed as the set of known ideas. While ideas remain fixed our expressions enable us to
access them. This type of common is consistent with the Lockean common.
I regard this third case to be similar to the concept of memes. British ethologist Richard
Dawkins first coined the term in 1976 in his book ‘The Selfish Gene’. The meme concept has
since then been expanded by other authors. I base my description on Daniel Dennett in
‘Darwin’s Dangerous Idea’. The name meme is basically a play on words, derived from the
word gene and mimos (Greek for imitate, 1995: 344). Memes resemble genes in that they are
part of a cultural evolution via natural selection, similar to Darwin’s theory. The idea is that
there exist cultural units with the ability to replicate itself, much like strings of DNA. These
units are generally different sorts of ideas, but Dennett stresses that it is not simple ideas, like
colors or shapes, but rather “distinct memorable units” (1995: 344). Some of Dennett’s
examples of memes include the wheel, calculus, the alphabet, chess, and impressionism
(1995: 344). Using a music example, simple notes like C-E-G (which form a C major chord)
is not a meme, but I would think that certain chord progressions which form the standard for
41
how pop/rock songs are composed would be considered as memes. Themes from classical
pieces by Beethoven or Mozart could also fall into this category. There is no specified
smallest unit that could be a meme, but it should be something that could replicate itself out
of context (Dennett, 1995: 344). The whole discourse of music could probably be classified as
some sort of general meme, which then could be broken down to different memes about
melody, harmony, and rhythm. Maybe there also exist different memes for different genres of
music, memes for soul and hip-hop etc.
Just as organisms carry genes, books, pictures, records etc carry memes. Today memes might
even be electronically transmitted. The evolution of music could then be seen as memes
mutating in the minds of songwriters and composers or different memes melting together to
form new memes. An example of this might be the development of the thrash metal genre
from the 1970’s hard rock-meme and the ‘New Wave of British Heavy Metal’ (NWOBH)
meme in the minds of Lars Ulrich and James Hetfield of Metallica in the early 1980’s. Just as
genes are not always successful in certain environments, I would guess that the same could
probably be said of memes. The different capacities for understanding memes and the free
will of individuals to express memes will affect that.
I suggest that the third description of a common is the most reasonable when it comes to the
labour being done by artists. Creating is never being done in a complete social vacuum. It is a
product of social interaction with other individuals. A composer is dependent on earlier
musical works for inspiration and the end product is oftentimes the product of cumulative
efforts of several individuals. Therefore, the first and second case does not seem plausible
because they do not take account of the social component of creating. I question if any work
in popular culture could be said to be completely original without influences, but that is not to
understate the author’s function in shaping a work. I believe that the concept of memes
attempts to show that the process of creating is basically making variations on themes. For
example, American literature critic Harold Bloom describes the creation of poetry as just
“rewritings of other poems” (in Gordon, 1993: 1558).
An important difference between immaterial material (i.e. ideas) and physical material (e.g.
land) is that our perception of ideas or memes are shaped by the minds of previous individuals
as opposed to physical material which just happen to be available (although Locke seems that
claim that it is due to God). In order to learn about ideas we study different expressions of
them. Although ideas may be seen as unowned there is a stronger relationship to the work of
other individuals with respect to ideas than with physical material. The common of ideas
seem to have more collective properties than the physical common, without stating that the
common of ideas are collectively owned in the sense that it would imply a need for collective
approval before one can appropriate something from the common (cf. Cohen, 1994: 117).
Self-ownership
”The core idea of full self-ownership is that agents own themselves in just the same way that
they can fully own inanimate objects” (Vallentyne, 2000: 2). My interpretation is that this
suggests that it would be possible to characterize self-ownership by applying Honoré’s
analysis. That is, self-ownership contains some or most of Honoré’s elements. The basis for
self-ownership is thus the liberty and autonomy of individual persons. A very important
aspect of this is that self-ownership prevents individuals to use a person as a means to an end.
Practically, an individual has the right to control the use of one’s person from being killed or
used as a slave without his or her consent. Since self-ownership can be seen as the foundation
for ownership of external property, it could be argued that taking property from a person, or
forcing someone to give up their property, is a violation of that individual’s autonomy.
According to Nozick, “Taxation of earnings from labour is on a par with forced labour”
(Nozick, 1974: 169). The question is if it is really possible to derive manage and income
rights to immaterial objects from a self-ownership right?
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I will first address if the right to the material that one labours on is as strong as the right to
one’s body. Michael Otsuka questions if it is possible to have an equally strong right to a
piece of physical land as to one’s body and person. In any case that assumption has ”a good
deal less prima facie plausibility than a presumption in favor of such a right of ownership
over self” since no person initially has a greater right in land than any other (Otsuka, 1998:
76). This argument is basically an attack on how ownership seeps over from the body to some
object. I concluded in the above section that we access ideas by the expressions/work of many
individuals. The argument is that although ideas might be said to be unowned it would be
false to claim that one’s right to these ideas is as strong as one’s right over one’s person.
Although one might have a right to use ideas, previous expressions are needed in order to
access those ideas. I question why the creator should be able to benefit from the total value of
his or her creation when he or she may have not contributed to the whole value of that object,
which is indirectly the work of many individuals. It does not make sense to only reward the
last person to contribute to a work. Edwin Hettinger has brought up a similar objection to
copyrights. He argues that it might be very difficult to distinguish the individual effort of the
author. How much of the work can be ascribed to the author, is it not really just the tip of the
iceberg? There may be a lot of people that have been instrumental in forming a piece of music
(1994: 192).
I do not mean to imply that the creator should not be rewarded for his or her labour, but to
give a right to manage or income rights might not be in proportion to the self-ownership
rights. Robert Nozick questions why anybody should gain a property right by mixing one’s
labour with an object instead of losing it. Nozick takes an example with a person that spills
his tomato juice into the sea and asks whether that person has conquered the sea or lost his
tomato juice (Nozick, 1974: 175). Instead, one might propose that the creator should in some
sense give something back to the common if he or she gets to use ideas available in the
common. It could be argued that this is the case with copyright legislation, since it expires
after some time. I think that, although this is true, the term for copyright is currently too long
for that argument to hold. It does not make sense to give something back after the lifetime of
the creator plus 70 years.
Another objection against why self-ownership should give rise to a right to income to
immaterial objects emphasizes that certain rights are easier to connect to self-ownership than
others. The right to income is not as central to self-ownership as a right to use for instance. A
right to use and possess an object and to prevent others from taking it (if it is an exclusive
physical object) is not dependent on any outside social or economic system for justification.
The justification for those rights should be found in a person’s autonomy and liberty and
wishes to privately consume the fruits of his/her labour. A right to income does, however, rely
on other factors, like there being an economic system for the distribution of goods, prices
depending on competition and customer’s willingness to pay for certain goods. The right to
income presupposes a system that makes it possible to earn money. John Christman writes
that “the existence of property systems entails a net gain in the social product” due to
efficiency increases of stability and economies of scale (Christman, 2000: 349). However,
since this increase of value is caused by structures that enable trade it is not possible to claim
that income is justified on the basis of the value of an object before the existence of a market.
This has implications for legislation because “by regulating music as property, we facilitate
the development of markets from which creators and distributors can fund their livelihoods”
(Carrol, 2005: 4). By creating property systems we also create the possibility to profit on
property.
The right to income is not related to self-ownership and authors cannot claim to have a right
to make anything on their works. No author can demand that their work should be sold and it
seems peculiar that a market should justify whether a work is worthy of a reward, unless one
argues that the existence of a market justifies income rights. However, then we have shifted
the basis of the argument from self-ownership to the existence of a certain economic system.
Autonomy does not grant a creator to control the behavior of other individuals, either by
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demanding that they should pay what he wants or to control reproduction. I also object to
giving control rights due to the fact that it seems unjust that some individuals obviously has
more talent for creating music and can restrict access to the common by charging high prices.
A market economy can reward these people while blocking others from consuming.
The right to income also differs from the other elements of property since it does not hold
against any specific person. Other ownership rights prevent individuals from taking or using
property without authorization from the owner. Income rights are dependent on certain
conditions being fulfilled, namely the existence of another person willing to supply the owner
with income. While autonomy is a negative right in that it entails that others do not interfere
with my person, a right to income is a positive right in that it demands that we construct a
certain social system to support it. The right to income is not something than an owner has a
‘natural’ right to. The government could very well regulate it.
In this section I have shown that a right to income does not logically follow from a selfownership right. My reasons have been the use of previous expressions when creating as well
as the fact a right to income does not follow from autonomy. It seems that self-ownership
does not support income rights. However, I believe that self-ownership supports the right to
make a work available since forcing an originator to give up his or her work seems to be
violation of that person’s autonomy and free will. Self-ownership also supports the right to
use an object for personal use but I do not see that it supports the right to control
reproduction. If other individuals get hold of a copy of a work and start copying then this does
not mean that the originator’s autonomy to use his or her body is violated. However, if the
originator only has one reason for creating, i.e. profit, he or she could probably enforce a
restriction against copying as a condition for making a work available. This presupposes that
there exists a demand for it.
Labour
Labour is used in Locke’s theory in order to connect self-ownership rights with rights to an
object. It is easy to realize that labour is necessary when working on physical objects, but
what kind of (mental) labour is done when producing music? To understand this it is
necessary to understand the distinction between ideas and expression that is present in
copyright law as well as in my description of an immaterial common. Mental labour could
then be defined as creating an expression by putting together ideas. Accordingly, the answer
is that yes, there is labour involved when creating music.
In what way does labour justify manage and income rights to immaterial objects? Why is not
it like Nozick says, that one loses one’s work if one mixes it with something else? A
description of labour is that it can be a strenuous activity that a person would rather not do,
but is done because one has to. This can be labeled the avoidance view of labour (Hughes,
1988: 302). Since labour is hard a person need to be rewarded for working if any work is to
be done, and ownership is one way of rewarding. Ownership is then thought of as an
incentive to get individuals to produce more works, which consequently benefits society.
Another position may be that since labour is arduous it deserves a reward regardless of the
impact on motivation to labour. The question is whether the production of ideas should be
considered to be troublesome? I think it would be possible to argue that it could be seen as a
pleasant experience. But at the same time, I am sure there are times when creating a piece of
music that also involves difficult elements like a pressure to come up with something good. In
that respect I don’t think that mental labour is different from ordinary physical labour.
However, it is reasonable to ask if a creator really deserves to reap the full potential value of a
work. A work that might exceed the actual cost of labour. Is it not enough to be able to use
what one has produced, and what is really the best reward for labour? If one should be
compensated according to the unpleasantness of labour, then there should maybe be many
different kinds of rewards corresponding to the different efforts of people, not just one
possibility as with today’s system.
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The interpretation of the importance of labour that I find to be closest to Locke’s intentions is
that labour should be rewarded because it increases the value of an object. According to the
value-added labour theory, the labourer is entitled to a reward depending on how much he or
she benefits society (Hughes, 1988: 287). Locke writes that 9/10 of an object’s value is due to
labour (Locke, 2000: §40). Exactly how he derives at this figure is not perfectly clear and it is
questionable. It does, however, show his attitude towards labour as increasing wealth in
society. At the same time not all works improve society. I think it is fair to say that society
would manage without a lot of the work that is being done today. But even if Locke is correct
and labour has to be rewarded on these grounds the manage/income rights are only possible
ways to do this among others. In some cases it could prove to be a just reward, but more
probable it will either be a too great or too small reward. We are stuck with the same
question. What is really the best reward for labour? There are even more problems in
measuring the amount of value someone has added to a long chain of efforts, since the reward
should be in proportion to the value added.
I will not attempt to find a justifiable reward. Instead, I want to point out that the present
system is not the only possible solution. Instead it could be argued that the government, out of
collected taxes, would reward authors for their labour (Hettinger, 1994: 201). A problem with
this system is how to calculate the size of rewards. Nevertheless, Shavell and Ypersele
conclude that a reward system or an optional reward system, where creators would choose
between a reward or intellectual property rights, are just as good alternatives to a system of
intellectual property rights. According to their analysis, information about demand would be
based on sales-related information (Shavell and Ypersele, 2001: 27). I will not discuss how
reasonable or practical this particular example is. Instead, I believe that proposals that reward
creators without granting them manage or income rights should be examined more closely. In
certain cases the recognition that comes with producing a work might be an entirely
satisfactory reward to some authors. The reward should also be in proportion to the amount of
work put in. It is difficult to see that just giving the rights to manage or to income should
cover this in all cases. Sometimes it might be enough and sometimes less. The conclusion is
that the rights to manage and to income seem to be a bad way of rewarding authors based on
their work effort.
Although labour arguments could be seen as utilitarian in nature they seem to support some
sort of reward to the originator if certain conditions are met (according to the avoidance and
value-added viewpoints). The exact nature of that reward is albeit unclear. I find that there are
no specific arguments for either a right to manage reproduction or a right to income. They are
certainly possible rewards but probably not the only ones. I believe that labour arguments are
used to support a reward for that extra value beyond the right to use what one has laboured on
for instance. Therefore, I regard the right to make a work available as implied by labour,
regardless of the avoidance and value-added views of labour.
The proviso
The proviso states that enough, and as good has to be left in common after appropriation. In
this section I will examine whether or not it is possible to acquire music from the common
without breaking the proviso.
The proviso can be used to explain why ideas are not available for appropriation. Certain
kinds of everyday knowledge, like knowing how to wash a car, or important scientific
discoveries, like the theory of relativity cannot be owned. The reason being that this would
serious limit the possible actions of other individuals. Important facts about the world have to
be available to people otherwise it would soon not be allowed to do anything. This is also the
reason why copyright only grants property rights to expressions and not to ideas. If ideas were
available for appropriation, the set of ideas would soon be depleted. A literal interpretation of
Locke would give ownership rights to the actual material worked on (i.e. ideas), as in the
physical world, but this is an obvious violation of the proviso.
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An often referred account of Locke’s proviso is the one brought forth by Robert Nozick.
According to his proviso it is not allowed to acquire an object (in this case an expression, like
a piece of music) if it makes somebody else worse off “by no longer being able to use freely
(without appropriation) what he previously could” (Nozick, 1974: 176). Intuitively, it seems
to be easy to fulfill the proviso since the set of ideas is inexhaustible, several individuals may
use them at the same time. Hence, it is possible to argue that no one is made worse off
according to Nozick’s interpretation of Locke’s proviso, since it is only one single expression
that is appropriated. On the contrary, arguments are usually made that if someone expresses
an idea that will facilitate for others to gain access to said ideas (Hughes, 1998, 315). Nozick
argues that a medical researcher who synthesizes a new substance does not worsen others by
refusing to sell except on his terms. Reason being that any other person can synthesize the
same drug using the same chemicals (Nozick, 1974: 181).
Nevertheless, there are problems with the above intuitive interpretation of the proviso. An
individual that wants access to the ideas in the common also needs access to the expressions
that follow from ideas. It is not like the physical world where objects are fully visible. A
person needs to be ‘inserted’ into the common in some way, which is done by consuming
expressions. A suppressing of the common would make people worse off by denying them the
ability to interpret their reality and understanding their cultural heritage. That is why there is a
need to access the actual expressions and why it is not in accordance with Locke’s proviso to
leave enough for others by referring to the free ideas. There is a problem with surmising that
ideas really are available for all people. The truth is that they are not. A right to manage
expressions is in fact a right to manage ideas. In addition, copyrights do not allow for
individuals to “rediscover” a work, this is considered to be plagiarism.
It might be objected that no one is completely excluded from the common since music is
available in many forms for free, like on radio. The point that I want to make is that even if
someone is not completely excluded, ideas are more difficult to access. Nozick however,
argues that if a creator discovers a cure for a disease and appropriates the total supply of its
substances he does not worsen others, since no one could be worse off by not being able to
use something that was previously unavailable. The only restriction would be a time limit on
ownership since another inventor could independently discover the same invention sometime
later (Nozick, 1974: 182). Although I agree with Nozick, Locke also places a restriction
against waste that goes against Nozick’s argument. I will return to this in the next section.
There is also the possibility that some works will come to totally symbolize certain ideas. By
getting used to these expressions over time there will not be any satisfying substitutes. It
could then be argued that these works should be excluded from appropriation because of their
importance for people. Their lives would not be the same without them. Wendy Gordon
believes that this would leave the public worse off and takes an example if we would deny
certain uses of the Olympic name, for instance in connection with the Gay Olympics (Gordon,
1993: 1583).
Another ambiguity, which affects the process of creating by reusing works in new contexts or
creating a work similar to a protected one, is the problem of separating ideas from
expressions. If the distinction between idea and expression is even slightly unclear there
seems to be a problem with granting protection to ideas rather than expressions. This has
implications for certain aspects when creating. The re-use and improvement of other people’s
work is threatened by giving extensive rights for authors to manage works. With patents it is
possible to use an existing patent in order to create a better invention, but with copyrights this
is usually not allowed. In some sense that might be said to hinder my abilities to work on
material in order to create something new. One example of this is the remix-culture prominent
in hip-hop music. In 2004 the American DJ Danger Mouse made a record by mixing together
the White Album by the Beatles with the Black Album by Jay-Z into a new record called the
Grey Album, which became popular on the Internet and caused controversy with the Beatles’
record company (Producer Of The Grey Album, Jay-Z/ Beatles Mash-Up, Gets Served, 2004).
46
I believe that the proviso affects the right to manage intellectual property when it comes to
reproducing content (the right to make a work available seems rather unaffected as it does not
restrict others from using something, nothing is appropriated by just existing in someone’s
head). It restricts originators from imposing conditions on end users that they are not allowed
to spread content further when that means that other individuals are prevented from accessing
ideas. One might also object to the fact that creators can prevent people from accessing the
common by charging high fees (the right to income), although it is unclear what a “too high”
fee is or if current CD prices could be said to be that. However, I think that it is possible to
question why content providers should have so much influence in controlling the common.
Waste
This section discusses how the manage and income rights to music are affected by waste.
Locke introduces this criterion to prevent waste in the physical world, but can music really
decay just as fruit? The answer to that question is obviously no, but there are other ways to
consider waste of immaterial objects.
One interpretation of Locke’s waste criterion might be to use the work as efficiently as
possible. Physical objects demand an exclusive control of the object for it to be used
effectively. According to Nozick there are social factors that explain why control is necessary.
Private property puts objects in the hands of those who can use them most efficiently. In
addition to this people are encouraged to experiment, since they don’t need to convince a lot
of persons to be able to use an object (Nozick, 1974: 177). Seana Schiffrin expands on this by
saying that “The land would not be as effectively used if a user’s plan could be disrupted by
the imposition of another’s inconsistent plans or spontaneous use” (Schiffrin, 2001: 152).
Seeing that the properties of immaterial objects enable them to be used by several persons
simultaneously, it is possible to increase an object’s efficiency by letting more people use it.
In terms of Pareto efficiency, where a Pareto improvement is a move from one allocation of
resources to another that makes at least one person better off but leaves no one worse off, and
Pareto optimality occurs when no further Pareto improvements can be made (Varian, 1999:
15). Free access is Pareto optimal since everyone would benefit from a creation, whereas the
proviso implies that only Pareto improvements are allowed. The waste-criterion is also
consistent with Locke’s ambition that the earth is to be useful to mankind, which is the
purpose of God’s gift.
The non-exclusive property of music means that there are no reasons for not using it as much
as possible. If a work is blocked there is a risk that it won’t benefit as many people as it has
potential to do. In addition, there may be positive effects since the underlying ideas are spread
further. This leads to the increased availability of the common. It could be objected that
today’s copyright legislation actually prevents music from waste by giving it protection for a
limited time. But this does not justify the control of reproduction by creators to their work for
such a long time. Works are not free to use until seventy years after the creator has died. By
that time there are probably not that many works that are still as relevant as they were upon
creation. I think that that kind of protection cannot be justified by Locke’s waste-criterion.
Nor is it necessary to give authors a right to manage since that prevents people from using
creations that could be used independently of the originator.
Waste restricts the right to reproduce content since digitized music could be enjoyed by many
individuals due to its non-exclusive properties (the right to make a work available is not
affected since I interpret waste to only apply to works that are publicly known and not just
existing in someone’s head). Therefore I believe that the right to manage is limited by the
waste-criterion. Waste also restricts the right to income if price discriminates many potential
users from accessing music.
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Conclusions
Right to manage
The right to manage is represented in copyright law by two rights, namely the right to make a
work available and the right to control reproduction.
Right to income
The right to income, i.e. the right to benefit from the full value of one’s creation, is implied in
copyright law by the right to control reproduction.
Common
This section compared three different proposals for an immaterial common. Two of the
possible accounts were dismissed since it is unlikely to view creations as finished products in
the common or a complete product of a creator’s imagination. These two examples either
understate or overstate the creator’s importance in creating. The conclusion is that there is an
immaterial common similar to the Lockean common where ideas are the immaterial
counterpart to physical raw material and expressions are the immaterial counterpart to the
products of physical labour. This distinction was illustrated by referring to the idea of memes,
which explain how ideas are transmitted in society by expressions.
Self-ownership
The basis for self-ownership is the liberty and autonomy of individuals and a description
includes the rights presented by Honoré. This section concluded that self-ownership does not
support income rights due to the importance of previous work when creating. Consequently a
creator cannot have an equally strong right to the material laboured on as the right to self. It is
the existence of a market that gives the creator an opportunity to profit from his or her
creations. However, the existence of a market is not related to the creator’s self-ownership
rights in any way. Self-ownership is more applicable to rights involving the personal use and
possession of an object where autonomy is challenged if the originator is prevented from
using his or her creation, as well as the right to make it available to the public. The right to
control reproduction is also not supported since the autonomy of an agent is not challenged if
other individuals start to reproduce a work as long as the creator is free to use his or her copy.
Thus, the right to manage is just partially supported by self-ownership.
Labour
This section concluded that some form of work is done when labouring on ideas and that
there exists arguments in favor of rewarding a creator due to the avoidance and value-added
view of labour. However, none of these perspectives specifically support either manage or
income rights like those found in copyright legislation.
Locke’s proviso
An intuitive interpretation of the proviso is that the common cannot be depleted since it is
made up of ideas that are not protected by today’s legislation. However, an objection is that
since expressions are the road to ideas they are essential in order to access the content of the
common. To control reproduction and to charge (too much?) for access is against Locke’s
proviso.
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Waste
An interpretation of waste in the immaterial world is that if a work is not used as efficiently as
it could be it is subject to waste. The non-exclusive property of music means that it can
benefit many individuals simultaneously without the creator losing his or her ability to use the
work. One interpretation is that Locke is particularly sensitive about protecting the common
from being exploited by a few individuals. Therefore it is against Locke’s intention if a
creator blocks people from using a work by exclusively controlling reproduction or charging
prices that discriminates many potential users.
Implications for file sharing
Neither the right to control reproduction nor the right to income seem to pass Locke’s
restrictions, nor are they supported by his arguments and therefore cannot be justified
according to the natural rights perspective. However, the right to make a work available,
which is a part of the right to manage, is not affected by the restrictions and is supported by
Locke’s arguments in favor of ownership. The right to make a work public is tightly
connected to self-ownership; a person has the exclusive right to make something public based
on that person’s free will. In addition, the right to make a work available is connected to the
personal use of an object and could be seen as one of the most basic rights supported by
Locke. Therefore the right to manage is only partially justified according to the natural rights
perspective. In any case, this analysis proves that the economic rights of today’s copyright
legislation, which grants extensive control rights of reproduction and implies a right to charge
anything for a product, is challenged by Locke’s theory. Nevertheless, the labour argument
seems to support some kind of reward under certain circumstances. The avoidance view of
labour is not as appealing as the value-added view, since it is strange to reward someone if
they are stealing from the common just because labour is hard. In that respect the value-added
view of labour is more interesting since it supports rewards for benefiting society, i.e. a
reward might be justified for benefiting the common.
It can probably be assumed that the recording industry has had an interest in dividing up the
population between producers and consumers of music. They neglect the fact that there is no
definite line between these groups; most artists are probably music consumers who would
benefit from a more accessible common. However, this division facilitates when arguing
against piracy since they want to portray a group of people as freeloaders on other people’s
creativity. To some extent they are correct in that assumption. Before the introduction of
phonographs and radio, music was mainly performed in homes while the music business
profited from live performances, sales of sheet music and instruments. As a result of these
technological breakthroughs, music consumption gradually shifted to a habit of listening to
rather than performing music (Rothenbuhler and McCourt, 2004: 228). However, new
technology such as P2P have the potential for enhancing access to the common by involving
consumers more in the distribution of music. This could have great influence on the
production of music as well. One potential implication of P2P file sharing is that if one person
produces a work and spread it on a network others may contribute to this piece by adding to
it. This way the production of music would be more communal, perhaps changing the creatorconsumer relationship present in today’s system. This would also encourage people in the
process of shaping culture and its meaning and to create a more diverse culture.
The case study of Kazaa showed the difficulties for Niklas Zennström and Janus Friis in
licensing content from rights holders, as well the record industry’s response to file sharing
where they used several measures to stop file sharing services and to control content
distribution. The conclusions from my Lockean analysis of ownership, prove that content
providers are not justified in their attempts to stop file sharing services since manage and
income rights to music cannot be justified, despite the fact that they have been legally
successful. The Lockean analysis emphasizes the importance of the common and does not
support extensive control rights like the right to reproduction. Therefore their attempts, legal
49
as well as through spoofing etc, to stop services that facilitate the spreading of music and
access to the common cannot be justified. Record companies seem interested in controlling
the Internet just as they control the physical market. However, in the case of immaterial
objects the right to control reproduction is overridden by the potential harm to the common
made if those rights are protected. The public has a liberty to use the common.
Although the natural rights perspective seems to go against copyright there are other
perspectives to be examined before we can draw the final conclusions on intellectual
property. For instance, it would not be practical for society to remove copyright and not
replace it with anything. The need for incentives has to be taken into consideration. A creator
will according to the Lockean analysis have the right to make a work public, which means
that unless he or she is satisfied with conditions surrounding compensation it is unlikely that
he or she will release it or even put in the effort to work on something. But, this does not
imply that today’s system based on market economy is the most attractive. As described in
part I, conflicts have sometimes been solved when the government regulates the market and
imposes compulsory licenses so that anyone can license music for a fixed fee. Another
solution is where the government rewards creators out of tax revenue. For example, in
Sweden there exists a state income guarantee for selected composers, writers, musicians, film
directors etc. that have shown an importance for Swedish cultural life. Considerations will
also have to be made with respect to the impact of piracy on consumption. If it turns out that
copyright infringement does not affect sales of music, or even contribute to sales, then that
might make an argument in favor of allowing file sharing services.
There are at least two possible future alternatives to consider for copyright law. At this point
record companies are beginning to sell music online, e.g. subscription services, in a way that
is more accessible for consumers and cheaper compared to CD prices. Therefore, it might be
wise to let the market adjust to the illegal file sharing before considering to change copyright
law again. It is then possible to keep the downloading of copyrighted material unlawful.
However, the music business needs to be cautious. Strong copyright law as well as more
content protection by record companies might lead to increased piracy instead of increased
legal commerce since a DRM-protected song is not as attractive as a MP3 file due to the
restricting usage. Instead it would be wiser for content providers to compete by low prices,
convenience and diverse services so that consumers do not turn to file sharing (cf. Biddle et
al, 2002). The government could try to push for more and cheaper alternatives so that
consumers can choose the alternative that suits them the best by introducing compulsory
licenses. That way, content providers would be forced to license their material to perhaps
fixed fees. The Lockean analysis does not contradict government intervention on this matter.
Another strategy might be to shorten copyright duration so that works become available
sooner, which also would increase incentives for copyright holders to provide attractive
services. Otherwise, consumers will wait until they get works for free.
The second alternative is to change copyright from the ground up. In that case, such work
should start with an analysis of what role copyright should play in society and the kind of
society that is desirable. This evaluation could bring together different perspectives and could
include, for example, a Lockean analysis. There are plenty of issues to be resolved like a
breakdown of the process of creating, different means for distributing content and its
implications, access to information by citizens, providing the right amount of incentives,
stimulation of the development of new technology so that it is not hindered by fear of piracy,
the promotion of cultural diversity etc. However, this reformed copyright system should
perhaps be more dynamic and capable of dealing with future technologies than the present
system.
The new Swedish legislation from July 2005 shows that this country has chosen the first
alternative described above, by making file sharing illegal both as regards up- and
downloading, in all cases where rights holders have not given their specific consent. In
practice this means the virtually all up- and downloading as far as the consumer is concerned
50
because of the uncertainties that arise regarding which expression has or has not been given.
Yet, politicians in Sweden now seem interested in reforming copyright law and have started
to investigate the possibility to speed up the introduction of legal services. Ekonominyheterna
has reported that there are discussions about replacing copyright with fees on broadband
connections etc (‘Fildelning blir knappast lagligt’, 2006). Although more services are needed,
it is important for the government to be consistent when dealing with this issue. It would not
be wise to drastically change copyright law so soon, when the last revision came in mid-2005.
That would undermine the attempts to create legal alternatives to file sharing that would only
confuse people even more about the purpose of legislation that keeps changing.
51
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Part II
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