1 Sharing and Stealing by JESSICA LITMAN��� Introduction ........................................................................................2 I. Someone Knows What I Want to Know.....................................5 II. Formalities and Default Rules...................................................13 III. Digression: The Music of Room A-9........................................22 IV. Resetting the Default Rules.......................................................24 V. Sharing and Hoarding ...............................................................37 ��� Professor of Law, Wayne State University. Jon Weinberg���s suggestions greatly improved this paper. I���m also grateful to Jane Ginsburg, Justin Hughes, David Lametti, Lydia Pallas Loren, Kevin Marks, Neil Netanel, Richard Stallman, and Fred Von Lohmann, who gave me very helpful comments on earlier drafts, and to Mike Carroll, Anupam Chander, Peggy Radin, and Tim Wu, whose criticism of a much earlier version persuaded me to take a different approach. All URL citations are up to date as of September 20, 2004.

2 Introduction The purpose of copyright is to encourage the creation and mass dissemination of a wide variety of works. Until recently, most means of mass dissemination required a significant capital investment. Disseminators needed printing presses, trains or trucks, warehouses, broadcast towers, or communications satellites. It made economic sense to channel the lion���s share of the proceeds of copyrights to the publishers and distributors, and the law was designed to facilitate that.1 Digital distribution raises the possibility of mass dissemination without the assistance of professional distributors, via direct author-to-consumer and consumer-to- consumer dissemination. Digital distribution, thus, invites us to reconsider the assumptions underlying the conventional copyright model. We are still in the early history of the networked digital environment, but already we���ve seen experiments with both direct and consumer-to- consumer distribution of works of authorship. Direct author distribution ��� by itself ��� has not yet garnered a lot of attention because the most publicized efforts have been less than wholly successful.2 When direct author distribution is augmented by consumer-to-consumer distribution, though, the combination has the potential to revolutionize the distribution chain. That potential has not escaped the attention of professional distributors. Consumer-to-consumer dissemination, especially in the form of peer-to-peer file sharing, has been met with hostility and panic.3 1. See BENJAMIN KAPLAN, AN UNHURRIED VIEW OF COPYRIGHT 75 (1966) JESSICA LITMAN, DIGITAL COPYRIGHT 104 (2001) see, e.g., American Geophysical Union v. Texaco, 60 F.3d 913 (2d Cir. 1994) (���the monopoly privileges conferred by copyright protection and the potential financial rewards therefrom are not directly serving to motivate authors to write individual articles rather, they serve to motivate publishers to produce journals, which provide the conventional and often exclusive means for disseminating these individual articles���). 2. Stephen King���s The Plant has been the most famous example of the direct distribution model. Stephen King promised to keep writing the novel so long as three quarters of the individuals who downloaded each chapter paid a dollar for it. Initially, 76% of the people who downloaded chapters paid. After 4 chapters, the percentage of paying readers dropped to 46%, and King dropped the project. See M.J. Rose, Stephen King���s ���Plant��� Uprooted, WIREDNEWS, Nov. 28, 2000, at http://www.wired.com/news/culture/0,1284,40356,00.html. While 46% probably exceeds the percentage of paying readers of a typical work of King fiction published in book form (allowing for book borrowers, used book purchasers, etc.), it fell below King���s announced minimum. 3. It is not yet clear whether peer-to-peer file sharing of music recordings decreases or increases sales of CDs. Compare Felix Oberholzer & Koleman Strumpf, The Effect of File Sharing on Record Sales: An Empirical Analysis (March 2004), available at http://www.unc.edu/~cigar/papers/FileSharing_March2004.pdf (concluding that file sharing does not reduce and may increase sales), with Stan Liebowitz, Will MP3 Downloads Annihilate the Record Industry? The Evidence So Far (June 2003), available at

3 Legislation pending in Congress seeks to deter consumers from engaging in peer-to-peer file sharing.4 Meanwhile, representatives of the music, recording and film industries have sued the purveyors of peer-to-peer file sharing software,5 the Internet service providers who enable consumers to trade files,6 and more than 5000 individual consumers accused of making recorded music available to other consumers over the Internet.7 In this paper, I propose that we look for some of the answers to the vexing problem of unauthorized exchange of music files on the Internet in the wisdom intellectual property law has accumulated about the protection and distribution of factual information. In particular, I analyze the digital information resource that has developed on the Internet, and suggest that what we should be trying to achieve is an online musical smorgasbord of comparable breadth and variety. Ten years ago, an influential government task force proposed enhancing the scope of intellectual property rights in the digital environment as a device to encourage investment in the infrastructure underlying a national digital network.8 As the task force explained, the cost of constructing such a network was beyond the federal government���s ability to fund, and the construction would need to be undertaken by the private sector. The private sector, however, would be reluctant to invest its resources unless it saw profits to be made. The network would be commercial only if large numbers of people could be persuaded to subscribe to digital network services, which would require a killer application to draw people online. In the view of the task force, that application was the possibility consumers could enjoy movies, music and other content on demand. Enhanced copyright protection would be needed to persuade the producers of movies, music and other content to make the investment in making their material available over the national digital network. In order to create a viable online information and entertainment resource, the task force concluded, the United States needed to promise the http://www.utdallas.edu/~liebowit/intprop/records.pdf (attributing decline in CD sales to P2P file sharing). See also LAWRENCE LESSIG, FREE CULTURE 68-73 (2004). 4. See H.R. 2572, 108th Cong.. (2003) H.R. 2517, 108th Cong. (2003) H.R. 4077, 108th Cong.,(2004) S. 2560, 108th Cong. (2004). 5. See MGM v. Grokster, 380 F.3d 1154 (9th Cir. 2004) A&M v. Napster, 239 F.3d 1004 (9th Cir. 2001) In re Aimster, 334 F.3d 643 (7th Cir. 2003) 6. See RIAA v. Verizon, 351 F.3d 1229 (D.C. Cir. 2003). . 7. See RIAA, Recording Industry Begins Suing P2P File Sharers Who Illegally Offer Copyrighted Music Online, Sept. 8, 2003, at http://www.riaa.com/news/newsletter/090803.asp Jefferson Graham, Freeze! Drop the song! File-swappers targeted, USA TODAY, October 8, 2004, at 3B. 8. See INFORMATION INFRASTRUCTURE TASK FORCE, INTELLECTUAL PROPERTY AND THE NATIONAL INFORMATION INFRASTRUCTURE: THE REPORT OF THE WORKING GROUP ON INTELLECTUAL PROPERTY RIGHTS 7-17, 218-38 (1995).

4 distributors of copyrighted works a larger share of the copyright pie ��� only then would they invest the resources needed to develop digital content that would be sufficiently compelling to convince ordinary consumers to pay for Internet access.9 With the benefit of hindsight, it���s become clear that most of the assumptions underlying that argument were wrong. Greatly expanded copyright has not yet encouraged movies or music online ��� there is an enormous variety of music and movies available over the Internet, but the overwhelming majority of what���s there is there over the vehement objections of the content owners. Nonetheless, the network has grown at an unbelievable rate. The killer application that fueled the growth of the Internet wasn���t digital movies, after all. Instead, it was communication ��� email, chat, online forums and personal web pages. It turns out that people want to communicate with one another, and that they love to share. The information space that has grown up on the World Wide Web is largely the result of anarchic volunteerism ��� not to build the pipes, which have been constructed by telephone and cable companies to meet consumer demand for broadband Internet access,10 but to supply the information that runs through them. Anecdotal evidence indicates that at least for some material, untamed digital sharing turns out to be a more efficient method of distribution than either paid subscription or the sale of conventional copies. If untamed anarchic digital sharing is a superior distribution mechanism, or even a useful adjunct to conventional distribution, we ought to encourage it rather than make it more difficult. Part I of this essay explores the burgeoning digital information space that has grown up on the Internet in the last two decades. In Part II, I review the legal obstacles preventing us from simply treating digital music the way we treat digital information. Amendments to the copyright law enacted over the past 30 years have erected legal barriers to consumer-to- consumer distribution that make lawful exchange of copyrighted material extremely difficult. Part III tells a true story about my son���s third grade classroom, and spends a brief moment looking at his teacher���s use of the resources she finds on the Internet. Part IV suggests that we look to the digital information space described in Part I as a model for crafting a solution to the controversy over peer-to-peer file sharing, and reviews some of the proposals made in recent copyright scholarship. Finally, Part V 9. Id. LITMAN, supra note 1, at 89-100. 10. See, e.g., Jim Hu, Broadband Numbers Show Heightened Demand, C|NET NEWS.COM (October 31, 2003), at http://news.com.com/2100-1034-5100321.html Matt Richtel, Fast and Furious: The Race to Wire America, N.Y. TIMES, Nov. 16, 2003, �� 3 at 1.

5 briefly outlines a particular solution that is in some respects different from those discussed earlier. I. Someone knows what I want to know Someone knows what I want to know. Someone has the information I want. If I can find her, I can learn it from her. She will share it with me. Which came first, the computer or network television?11 I could try to find the answer in a reference book instead. On my bookshelf, I have two editions of the Encyclopedia Britannica, one published in 1989 and one assembled at a public library used-book sale from individual volumes published in 1964 and 1966. I no longer consult either of them with any frequency. In a jewel case somewhere near my desk, I have a multimedia CD ROM version of the Britannica that I received as a gift in 1998. I never look at it at all, and haven���t since the month that I received it. I used to buy an Almanac each year to look up quick facts (what���s the population of New Zealand?12 How old is Senator Barbara Mikulski?13), but between 1994 and beginning work on this project, I didn���t bother. I stopped relying on these books as it became possible to find specific answers to particular questions online, because the person or persons who knew what I wanted to know had been generous enough to post the answer where it was easy for me to find it. The search 11. Television, but not by much. Tom Genova���s TV history site, at http://www.tvhistory.tv/1941%20QF.htm, tells us that NBC began commercial broadcasts in 1941. See also ERIK BARNOUW, TUBE OF PLENTY: THE EVOLUTION OF AMERICAN TELEVISION 99-148 (rev. ed. 1982). According to Asaf Goldschmidt���s and Atsushi Akera���s introduction to the University of Pennsylvania���s special exhibition on John Mauchley, at http://www.library.upenn.edu/special/gallery/mauchly/jwmintro.html, the ENIAC computer came along in 1946. See also 16 ENCYCLOPEDIA BRITANNICA 641-42 (1989). 12. The 2003 Information Please/Time Almanac lists New Zealand���s population at 3,908,037. TIME ALMANAC 2003 WITH INFORMATION PLEASE 828 (2002). The government of New Zealand currently describes its population as ���a diverse multi-cultural population of 4 million people, the majority of whom are of British descent. New Zealand���s indigenous Maori make up around 14 percent of the population.��� See NZGO, People and History, at http://www.purenz.com/index.cfm/purenz_page/3DD63CE4-18FD-402B-A74A- A4C7A7AF5630.html. The SNZ Pop Clock at http://www.stats.govt.nz/domino/external/web/prod_serv.nsf/htmldocs/Pop+Clock estimates New Zealand���s population on 11 October 2003 at 04:16:30 AM as 4,025,641. 13. According to the Information Please/Time Almanac, Senator Mikulski was born in 1936. INFORMATION PLEASE/TIME ALMANAC, supra note 12, at 45. See also, THE POLITICAL GRAVEYARD INDEX TO POLITICIANS at http://politicalgraveyard.com/bio/midkiff-milen.html (���Mikulski, Barbara Ann (b. 1936)���also known as Barbara A. Mikulski���of Baltimore, Md. Born in Baltimore, Md., July 20, 1936. Democrat.���). The 2001 World Almanac doesn���t include that information, but will tell you that Colin Powell was born in 1937. See WORLD ALMANAC AND BOOK OF FACTS 2001 at 320 (2000).