P2P Companies Take Aim at the RIAA

WASHINGTON--Six peer-to-peer software vendors have launched a counterattack against U.S. music companies, criticizing what they call the recording industry's "dinosaur" approach of suing alleged file downloaders for trading copyrighted songs. The group is calling on Congress to force a different solution.

At the official launch of the P2P United lobbying group Monday, the peer-to-peer vendors also called on Congress to consider compulsory licensing of music, a system similar to the fees radio stations pay for music. This system could force the recording industry to make its music available to peer-to-peer users for a price. The peer-to-peer vendors--faced with multiple hearings in Congress this year on the dangers of using peer-to-peer software, as well as lawsuits against their users brought by the Recording Industry Association of America--said they need to take the offensive in educating Congress about the merits of their software.

The debate over file sharing belongs in Congress and in the courts, but it "absolutely does not belong in the living rooms of average Americans," said Adam Eisgrau, executive director of the lobbying group, referring to lawsuits the RIAA filed against 261 alleged music uploaders earlier this month.

"It is long past time for the 'Tyrannosaurical' recording industry to stop blaming and suing its customers to cover up the industry's own glaring failures to adapt yet again to a new technology, one that should have already been making millions for it, and for the average artist," Eisgrau added.

Limited Reaction

The RIAA issued a statement saying P2P United's release of a code of conduct for its members was a good step forward. The RIAA did not, however, comment on P2P United's call for compulsory licensing of music.

"It is refreshing to see that P2P United is acknowledging that their members should be more active in educating their users about the consequences of illegal file sharing that is rampant on their networks as well as the other risks these networks pose to personal privacy and security," Amy Weiss, senior vice president of communications for RIAA, said in a statement. "But, let's face it, they need to do a whole lot more before they can claim to be legitimate businesses."

The RIAA also issued a press release Monday saying 64 people have agreed to settlements since the RIAA began suing file traders in early September. Twelve of those 64 settlements were agreed to before the RIAA filed a lawsuit, so they weren't part of the original 261 lawsuits announced this month. The RIAA also announced that it has received 838 affidavits for its "Clean Slate Program," which offers amnesty to peer-to-peer users who voluntarily identify themselves and pledge to stop sharing copyrighted music on the Internet.

"The music community's efforts have triggered a national conversation--especially between parents and kids--about what's legal and illegal when it comes to music on the Internet," said Cary Sherman, president of the RIAA, in a statement. "In the end it will be decided not in the courtrooms, but at kitchen tables across the country. We are heartened by the response we have seen so far."

DMCA Debate

P2P United's launch event comes a day before a hearing on file sharing before the Permanent Investigations Subcommittee of the Senate Governmental Affairs Committee. Subcommittee Chairman Norm Coleman, (R-Minnesota), has criticized the RIAA's tactics of suing file sharers and has said his subcommittee will look for compromise solutions to the sharing of copyrighted works.

P2P United members also attacked the provision in the U.S. Digital Millennium Copyright Act that allows copyright holders to subpoena the names and addresses of alleged infringers without first getting the subpoena cleared by a judge. Wayne Rosso, president of Grokster, said the RIAA's use of the subpoenas to sue a 12-year-old from New York City amounted to "child abuse."

Rosso attacked the subpoenas, issued by a court clerk after copyright owners file paperwork saying they have reason to believe their copyrights were violated, as giving the RIAA easier access to information than most law enforcement agencies have. "The kind of tactics--the innuendo, the smear campaign, the fear tactics, the intimidation--can't be allowed to run roughshod the way it is right now," Rosso said. "The RIAA has more subpoena power to chase down 60 million Americans than the FBI does to chase down terrorists."

The RIAA lawsuits are affecting people's lives, Eisgrau added. "We are looking at bankrupting families," he said. "We are looking at scaring the bejesus out of students who ought to be concentrating on their studies."

Code of Conduct

P2P United, which also includes Lime Wire and Morpheus distributor StreamCast Networks, also released a ten-point code of conduct, calling on members to prominently inform users that copyright infringement is forbidden and may cause the user to face criminal or civil penalties. The code of conduct also calls on members of P2P United to cooperate fully with law enforcement officials investigating child pornography traded using their software and to not install any software on users' computers without consent.

All six members of P2P United are mostly in compliance with the code of conduct now, but all pledged to be fully compliant in their next software releases. All six companies should be fully compliant by the end of the year, said Eisgrau. The group also promoted its new Web site, P2Punited.org, which warns peer-to-peer users of the consequences of copyright violations and includes a link to the RIAA's Web site. The P2P United Web site also encourages peer-to-peer users to contact their congressional representatives about the issue.

But members of P2P United accused the RIAA of blaming technology instead of blaming RIAA members' slow embrace of Internet music services for the estimated 63 million peer-to-peer users in the U.S.

Missing from P2P United is Sharman Networks, vendor of the popular Kazaa peer-to-peer software. The members of P2P United are focusing on compulsory licenses as one way to fix the problem of users sharing copyrighted works, said Eisgrau, while Sharman Networks has trumpeted its digital rights management software, Altnet, saying it would discourage unauthorized file trading.

Payment Plan

P2P United members promoted compulsory licensing as a way for music companies and artists to receive payments for music traded using peer-to-peer software, but they didn't offer details about how such a system would work. In radio, music is free to listeners, while the station owners pay the fees to the recording companies; but Eisgrau suggested that Internet users might be billed in a peer-to-peer compulsory licensing agreement.

"Up until now, any time this message has been brought to Congress and brought to other policy-makers, any time the phase compulsory license, has been used, it has been reacted to as if it were radioactive," Eisgrau said. "We don't want to presume we have a specific solution. It is way too early to dig down into the details if the suggestion is 'no, it can't possibly work.'"

P2P United would be willing to discuss various payment options with the recording industry from across a negotiating table, Eisgrau added, but he called peer-to-peer a neutral technology that is used for trading all kinds of files, not just copyrighted music. In answer to the question of who would pay under a compulsory license, Eisgrau said, "It bears further discussion...but it doesn't sound offhand like the providers of a neutral technology itself would be paying in, although candidly that issue is on the table."

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