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Wall Street Journal on the Sampling Licenses

Mike Linksvayer, October 1st, 2005

by Ethan Smith, Staff Reporter of The Wall Street Journal

For some people, the future of copyright law is here, and it looks a lot like Gilberto Gil.

The Brazilian singer-songwriter plans to release a groundbreaking CD this winter, which will include three of his biggest hits from the 1970s. It isn’t the content of the disc that makes it so novel, though — it’s the copyright notice that will accompany it.

Instead of the standard “all rights reserved,” the notice will explicitly allow users of the CD to work the music into their own material. “You are free… to make derivative works,” the notice will state in part. That’s a significant departure from the standard copyright notice, which forbids such use of creative material and requires a legal agreement to be worked out for any exceptions.

Is this the future of copyright? Perhaps. But a better way to think of it is that it’s one of the possible futures of copyright. Because right now, it’s all pretty much up for grabs.

Blame it all on the Digital Age. As any digital downloader can tell you, technology and the Internet have made it simple for almost anyone to make virtually unlimited copies of music, videos and other creative works. With so many people doing just that, artists and entertainment companies sometimes appear helpless to prevent illegal copying, and their halting legal efforts so far have antagonized customers while hardly putting a dent in piracy.

The challenge is finding a way out of this mess. Efforts fall broadly into two camps. On one side, generally speaking, are those who revel in the freedom that technology has brought to the distribution of creative material, and who believe that copyright law should reflect this newfound freedom.

On the other side are those who believe that the digital age hasn’t changed anything in terms of the rights of artists and entertainment companies to control the distribution of their creations and to be paid for them — the essence of copyright law. For them, the answer is to leave copyright law intact, and to use technology to make it harder for people to make digital copies.

Here’s a closer look at some of the competing visions.

In This Together

The copyright notice for Mr. Gil’s coming CD is being crafted by Creative Commons, a nonprofit organization that seeks to redraw the copyright landscape. Believing traditional copyrights are too restrictive, it aims to create plain-language copyright notices that explicitly offer a greater degree of freedom to those who would reshape or redistribute the copyrighted material.

Traditional copyright law gives owners of creative material — and them alone — the right to copy or distribute their works. Although they can waive all or part of those rights, the process isn’t easy and usually occurs in response to a particular request. Those hurdles, critics say, can hinder the open and freewheeling sharing of material the digital age makes possible.

Creative Commons seeks to make the system more flexible by spelling out which rights the copyright holder wishes to reserve and which are being waived without waiting for a request. Artists can mix and match from among four basic licensing agreements: They can decide whether they simply want attribution anytime their work is used by someone else; whether they want to deny others use of the work for profit without permission; whether they want to prevent others from altering the material; and whether they want to permit the use of material only if the new work is offered to the public under the same terms. An underlying layer of digital code enforces the rights laid out by the owner, telling computers how a given work can be used.

A Creative Commons license isn’t for everyone. It might appeal to independent artists for whom free samples, distributed online, might represent an attractive marketing option, or for someone like Mr. Gil, who believes that making it easier to share and reshape his music can be an important part of the creative process. But it’s unlikely to appeal to the big media companies, for which copyrighted material is what they sell.

Still, Mr. Gil, who is also Brazil’s culture minister, sees Creative Commons as a way to unlock the creative potential of digital technology. “I’m doing it as an artist,” he says. “But our ministry has been following the process and getting interested in supporting projects concerning free use,” not only for music, but also for creative content in general.

Tax Time?

A more radical proposal for overhauling the copyright system comes from William Fisher, a Harvard University law professor and director of the Berkman Center for Internet and Society.

Mr. Fisher believes that the wide-open nature of the Internet and the explosion of creative material that it has fostered are making the administration of copyright law increasingly unwieldy. Traditional copyright is beyond fixing, he believes, and ought to be scrapped in favor of a simpler system that doesn’t require an onerous effort to protect each piece of creative material against copying.

His solution is a regimen called compulsory licensing. In this system, music and film, after being registered with the copyright office, could be traded freely over the Internet, eliminating the problem of copyright enforcement. The owners would be compensated out of a fund raised by a new tax. In order to share the proceeds of the tax, content owners would be obliged to license their material for such use — that’s the compulsory part.

“The only palatable short-term taxation option would impose a levy upon services and things that are used to access, store, record and play digital entertainment,” Mr. Fisher says. “ISP access, blank media, MP3 players, CD burners, and so on.”

The professor estimates that a tax would need to be set at a blanket 15% to make up for the revenue lost to the new system. Critics already have pointed out, however, that the $2.4 billion he estimates his proposal would raise annually falls far short of the roughly $11 billion in annual revenue reaped by the music industry alone in the U.S.

Exercising Restraint

On the other side of the debate are those who believe that copyright law doesn’t need to be tinkered with at all; it just needs an effective enforcement mechanism, which is not out of the realm of possibility.

Steps already are being taken in this direction with technology known as digital-rights management, or DRM, a field led by Microsoft Corp. This technology aims to protect the copyrights of producers of digital materials while allowing for the traditional right under copyright law for people to copy materials for personal use.

Rather than locking up digital content, DRM puts it on a leash. For instance, DRM technology may serve as the basis for security features that allow for only a single copy of a CD to be made, and don’t allow the copy to be copied. The technology may allow tracks from the same CD to be exported to a portable MP3 player, but not to be transferred online.

In describing how DRM can protect entertainment providers without antagonizing consumers, Dave Fester, general manager of Microsoft’s digital media division, says, “DRM is the magic link that allows you to step into that secure world, yet do it in a smart, flexible way.”

Numerous security systems rely on Microsoft’s DRM, now in its fourth incarnation. Most of the new online music stores that sell music in the Windows Media format rely on Microsoft DRM to place limits on copying and burning; the others, Apple Computer Inc.’s iTunes store and Time Warner Inc.’s MusicNet, rely on different DRM schemes. And a handful of CDs have been sold with Microsoft-powered DRM systems in place, in an attempt to stanch the flow of copyrighted material onto the Internet.

Indeed, DRM has provided a middle ground for music companies that have hesitated to institute in the U.S. the draconian controls now standard in Europe and Asia, where CDs generally are sold with technology that prevents them from being copied in any way. Not wanting to go that far, these companies until now have settled for continuing to produce CDs that have no controls at all.

A pioneer in DRM technology is a CD by rhythm-and-blues singer Anthony Hamilton released in the U.S. in September by the BMG unit of Germany’s Bertelsmann AG. The CD relies on a copy-protection system from SunnComm Technologies Inc. of Phoenix. The system, which incorporates DRM technology, uses encryption to allow for the creation of only a handful of copies of the tracks on a CD inserted in a computer, for uses such as export to MP3 players.

However, the protection application runs only on some operating systems. Worse, many in the online community quickly pointed out that simply holding down the shift key while inserting the disc prevented the copy-protection application from running at all.

Thomas Hesse, BMG’s chief strategic officer, acknowledges the system’s shortcomings, but adds that it is “more a speed bump than a complete solution to all our problems.”

SunnComm Chief Executive Peter Jacobs points out that the shift-key trick only works if a user executes it the first time — and each subsequent time — the CD is inserted into his or her computer. Mr. Jacobs adds that future versions of the copy-protection software will make the trick even less likely to work.

“You can’t start from a perfect place,” says Mr. Jacobs.

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