Are We Promoting Piracy?

After the publication of Steve McCannell's alt.napster, we got a call from radio host David Lawrence, host of radio show called Online Tonight. He wanted to talk to Steve and Tim O'Reilly about whether our story is advocating online piracy. A sometimes contentious interview, the conversation covers a wide range of issues on copyright and intellectual property. Here is a transcript of that interview.

David: Why did you assemble a series of alternatives to Napster knowing what kind of legal hassles Napster is going through now?

Steve: Well, I was more interested in the protocols and file sharing in general than the whole Napster ho-ha-whatnot. All of a sudden people aren't constrained by the record labels' way of distributing their information and promoting whichever artist they would prefer to promote, and it's interesting how people are reacting to that.

David: Sort of inherent in that statement is a spin -- just as it would be a spin to say, "Well, all they're doing is using Napster to steal," because I'm sure there are some files on Napster that aren't held by some other copyright holder than the person making them available. What is the difference between Napster and any other alternative to Napster and a glorified Archie search on a bunch of FTP sites?

Tim: There are a lot of interesting differences. At the end of the day you're asking a whole lot of different questions wrapped up into one. Napster technically is not that much of a change from many things that went on before. You could, in fact, download lots of MP3s off the Web long before Napster was out there. What Napster did was revolutionary, and really interesting. They said, "Hey, we don't have to host the files ourselves, we don't even have to give people software so that they can host the files themselves. We're going to make hosting files a byproduct of consuming files." And that was a revolutionary change.

David: Why? Archie did the same thing. Archie didn't host any file. Archie went out, looked at the FTP index and brought back results. And that's what Napster does.

Tim: But it assumed that you had an FTP server. Having an Archie client didn't automatically expose the files that you were using to other users. And it was the fact that Napster realized that you could join the client and the server at the hip that really changed the nature of computing.

David: All right, so I know you think that's revolutionary and stuff, but think of the way Warez sites work. It's a circle of friends that crack software and you're only invited by admission, you're only invited if they know you, and then they do open up their FTP files to you. I mean, what's the difference?

Tim: Well, the difference is 60 million users versus probably a few hundred thousand in the know.

David: Right, who are all being told right now, through the filtering of Napster, that what they were doing was wrong.

Tim: Let's back up a little bit. I have to say I'm not someone who says that Napster has it all right, and in fact I don't think that we're anywhere near the equilibrium point that we need to get to for online music. But what happened when Napster came out was that all of a sudden something that had been kind of a backroom exercise by hackers suddenly became thoroughly mainstream. Anybody could do it. So they were in a way a canary in the coal mine, if you like, that was telling us that high-speed networking was becoming ubiquitous.

I believe firmly that most people want to pay for what they use online. It sounds like an odd and contrary thing to say, but the biggest problem that we have right now with online music is there is no legitimate alternative. The music companies have basically stood in the way of any legitimate alternative. So they're getting what they deserve -- that is, piracy, because there's no other way to do it.

Is downloading music stealing? Are there any legitimate uses of Napster? What is the industry's responsibility here? Users'?

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David: But they've already had piracy forever. I remember back in the '90s people were sending .au files around, so it's not like piracy has never existed. It's just never existed on such a massive scale. And it's never existed with such wonderful, glowing reviews from industry leaders as though it's some sort of revolution.

Tim: Again, you have to realize, I believe Napster is a revolution. It's ridiculous to say that it isn't. You don't get 60 million people using something if it's not a revolution, even if that revolution is only in ease of use. The fact is that we need to take what Napster did right and put it together with a business model and with an industry that's supportive of using it as a distribution medium.

David: OK. So if, all of a sudden, Napster started charging money, you think it would survive? Their current business plan where they're headed is just stupid, it's yet another proprietary secure-the-.nap file format. Do we need another one of those?

Tim: Right, I agree. I think that basically they need to accept that there will be some leakage from the system. Right now you can burn a CD, same thing. There's gonna be leakage. But what they have to do is move aggressively to say, "Hey, this is a medium in which we can expose people to more kinds of music, where we can enable a lot more try-before-you-buy, where you can figure out different ways to monetize that stream of interest." There's a lot of experience here. You look at the history, for example, of the Grateful Dead concerts -- and this is a subject I really like to bring up, and that is the sort-of moral connection between the artists themselves and their fans.

David: And you know the Deadheads came out and said, "If we catch you trading any of our files on Napster, your privileges on the Dead sites are taken away."

[Editor's Note: It's unclear what Lawrence is talking about here. This article reports on the Dead's policy that free file trading is permitted but making money off the music is not allowed, which seems to allow trading on Napster. What "your priveleges on the Dead sites" means is mysterious.]

Tim: Absolutely. And the point is that they're able to get away with that because they have a long history of a relationship with their fans in which they said, "This is what's OK, this is what's not OK." Whereas you have the record companies, which have very little moral legitimacy with their customers, saying, "We don't want you to do anything." They sued MP3.com, who wanted to pay them money! They just said, "Make it stop. We don't want people to have music online. It's threatening to us."

David: Not only that, they paid the money, over and over and over, and they still don't have the files. They've paid something like a $130 million already? I was in Toronto and I watched Michael Robertson speak at Canadian Music Week. He said, "Look, we paid the money. We were supposed to get a license. It's a year now. Where's the license?"

Tim: Right. So the point is that I believe that the music industry is partly at fault. They're training people to steal. At this point it's gonna be more difficult to get people trained to pay, whereas if they had jumped aggressively on the medium and said, "OK, let's try to use this as a vehicle." I still don't think it's something that's out of the box, but my advocacy on behalf of Napster is not because I'm saying, "Hey, all music ought to be free. I don't believe in intellectual property." I'm a big believer in intellectual property. I'm a publisher. But I also believe that you have to ride the horse in the direction it's going, and you have to look at where technology is taking us. And where technology is taking us is to ubiquitous high-speed connectivity, and when you think about that you have to come up with business models that support the creation and distribution of value. You can't just say, "Hey, we want to protect our old industry position and we're going to try to put our finger in the dike. If you do that, you lose the legitimacy with the users, and ultimately you lose control. So I guess I'm urging the music company to move forward as quickly as they can to give people that legitimate alternative.

David: You have books that you no longer publish. Would you support unlimited royalty-free distribution of those works over a Napster-type file sharing system for books?

Tim: There are a number of books that we no longer publish that we have open sourced and made available for free download, free redistribution.

David: Is it that they don't make money anymore?

Tim: No, actually it's a mix of books. Most of them are books that relate to Linux or other open-source projects where the authors were interested in having the book be as widely distributed as possible, and were less concerned with making as much money as possible. The other thing this question brings out that's a really important issue is: You have to realize that publishers are intermediaries. Music publishers, for example, seem to act as though they're the people who matter. There's the well-publicized Courtney Love speech in which she complained about the MP3 losses. She said, "Where's my share? If this is on behalf of the artist, why aren't I getting any of it?"

David: Yeah, she complained from the back seat of her limousine. Did you do the math? I mean, you're in a studio right now, and Steve is an expert. When you sat down and you really looked at that article that she wrote for Salon, the math just doesn't work. And people always quote Courtney Love. Courtney's a better guitar player than she a mathematician, I'm assured of that. I mean after looking at the article and knowing after 30 years of the recording industry what it costs to bring out a record, what it costs to record a record -- she had recording budgets in there of half a million dollars. There's not one artist that's on the charts today other than Britney Spears and the Backstreet Boys that could even command that kind of budget, let alone spend it.

Steve: Well, that's not necessarily all that true though, it all depends on the contract between the label and the artist. Half a million dollars really isn't all that much when you figure in the costs for promotion, production, music videos, etc. That money isn't just for the record, it is for the whole package. The other thing is that the money isn't just given to the artist, it's a loan that has to be paid back to the label. That is why many bands fall off the face of the Earth -- they can't afford the way the system works.

David: My point is half a million dollars -- the money just doesn't work the way she laid it out. If the record companies are so bad, how did she make all of her money? Take away the movies. How did she make any money with Hole?

Tim: The point is that some number of people make money. Again, we're going down a bit of a rat hole here, and I don't know that it's really the right direction to go in. The question was asked, "Would I free these books?" and I was starting to go on, on the point that the author of a product -- i.e., the author of a book or the songwriter or the musician -- and the publisher are not one and the same. And so, for example, you have to really look at the web of rights and the web of responsibilities that each has. So, for example, there's books or products that I would have loved to open source, but the author didn't want to. And I respect the rights of authors. I believe that they really count --

David: What if somebody does it for them? In other words, there are lots of books that are published with CD-ROMs in the back that have the entire text of the book on the CD-ROM. What if somebody takes that text and puts it on the Web, and says, "Screw the author. We don't care whether he wants them to or not?"

Tim: I believe that what we need to establish are the moral rights of creators to be compensated for their work. I need people to say, "I want to distribute this stuff as widely as possible, so please, take it and run with it," and somebody else says, "I don't want this distributed." We need to have a mechanism for making that clear and understanding it. You said, "Oh, the Grateful Dead said to people, 'We don't want you putting our stuff on Napster,'" and I think to some extent there's compliance because people say, "OK, we buy that. We have a relationship with those artists."

David: OK, Tim, come on now. Put any song in there. Put in the word "gray" and see how many times you'll come up with the Grateful Dead. I mean the compliance? What level of compliance is there?

Tim: Well, there's a level of compliance that people are still buying their records and they're doing OK.

[Editor's Note: Again, the speakers are confused about the Dead's rule. There is compliance in terms of profiting from the music, but users have not been asked to keep music off of Napster.]

David: What about the question where an artist says, "Look, I'm not finished with this piece of art. Not only that, I'm not proud of this piece of art. I don't want it on the Net. I don't want the works that I did in 1984 put on the Internet. I don't want that shown to my public." It's not like an artist is hell-bent for election to take his earliest attempts at watercolors or sketches and put them up in a gallery. Why is it OK for the end user of this -- any material, whether it's music or not -- why is it OK for them to be the decision makers?

Tim: I'm not saying that it is OK. I'm saying that the reason we're going down that path is because we have not provided any good alternatives.

David: So, when somebody works in a recording company and they grab like a half-mixed version of a song that's about to come out. This happened with an urban artist whose name I can't come up with at the moment, that scrapped the whole album because it was out on Napster. He just went back in the studio, got a new set of people to work with because all of his ability to display things, to stage things, was gone.

Tim: Yeah, and I think if that happens enough times and enough people see the damage, we'll start to build the ethic that says, "Oh, you know, I guess it's not so good to do this. We need to respect what people ask of us." Again, I'm not saying that compliance will be complete, but social norms has played an important role in all of this stuff. We have a bunch of people who are looking purely at technical or legal solutions, when in fact we need to really think through marketplace solutions and social norms. Those are the two things that are missing.

David: Do you think you could change the base nature of human nature, the ability -- do you think you can change the proclivity that humans have to take something that is available to them for free, especially when the collective says it's OK?

Tim: What you can do is find alternate ways to compensate the people who need to be compensated in that stream. You play music during some breaks, how do they get paid? They get paid because there's compulsory licensing that allows music to be played on radio and there's some pot of fees that get collected and distributed through BMI and ASCAP.

David: Compulsory licenses, believe me, would be great. I'd be thrilled if they would do compulsory licenses for the Net.

Tim: The reason we can't go there is not because there's not enough money for the artist, but because there's not enough money for the music companies.

Steve: There's not enough compenstation for the record labels to actually sign up with Napster. They want to deal with the distribution on their own terms. So that's why they just came up into this partnership with RealNetworks and they're going to launch Duet probably by the end of summer.

David: Well, you've got AOL Music, MusicNet, Duet -- you've got all these things that all the labels have been promising. It's kind of disingenuous, wouldn't you say, that they keep putting out CDs that are basically open platters of data and still keep trying to come up with secure file formats.

Tim: I don't think secure file formats are the way to go. First, you recognize where the future is going, and then you say, "OK, if that is the future, what are we going to do about it?" You don't put fingers in the dike and try to make that future not happen. When radio first came about people had to say, "Gee, what are we going to do about it?" There's a lot of crud out that this will mean the end of paid content. If that were the case, software has been in the same case for a long time. It's been possible to download software, and I'll tell you, nobody's put Microsoft out of business yet.

David: Microsoft has a very, very active and valid antipiracy program.

Tim: Absolutely. They also have very well-established channels for putting their product in the hands of people so that it's cheaper to pay than it is to steal. Right now we're in a situation where there is no good alternative that makes it cheaper and more effective to do the right thing. If people could pay for music dial tone and have anything they wanted for some reasonable fee, I think they would go there. They might not go there right away, because they've been trained that reasonable is zero, but I think you could do that through re-education. You do some policing and you do some work on that, just like Microsoft polices their license and have put up some little barriers, but they don't lock things up and throw away the key. We went through that with software.

David: I had asked whether or not along with providing people information on Napigator, iMesh and Gnutella, if you could also provide people with information, right along with it, so that it doesn't look as though you're trying to promote illegal activity. I haven't seen anybody write about this, especially from the pro-P2P camp. I see a lot of people saying, "This is the second coming of the Net; that P2P is revolutionary." When I see Intel say, "This is going to revolutionize everything," my BS detector goes up. Anytime anybody says, "This is going to revolutionize anything" in the world of computing or technology -- for how long? For three months? Nine months? Twelve months?

Steve: Well, P2P networks like Gnutella are an old idea though. This was Tim Berners-Lee's original version of the Web. It was supposed to be a two-way enabled Web where every machine acts as a server. Now we're talking about Gnutella being the next web. Well, that's exactly what Tim Berners-Lee was thinking about.

David: At that time it was because we were all using Unix boxes and they were servers, but with the world of personal computing sort of invading the Web as we knew it, that couldn't possibly be the case, and now we're seeing sort of what happens when you scale to that kind of size. I guess I want to give you the chance to talk about P2P, the technology and the architecture, and where you see this going.

Steve: I was talking to Tim before we started about three things that are really going to change everything. Napster's just the tip of the iceberg. Now that broadband connections are starting to get more and more prevelant, and more people are starting to use them, people are going to start jumping ship from Napster over to these alternative file-sharing networks. Even though we think the subscription model should work, I don't really believe it will. The big thing that is coming is MPEG-4, which is currently being developed but hasn't been adopted by Microsoft or RealNetworks yet. Once either one adopts the codec, movies and television shows will be traded online as easy as MP3's are currently. If I miss "The Sopranos," I'm not going to need my subscription to HBO anymore if I can get it online the next day.

David: If it's provided by somebody other than HBO, do you feel good about that?

Steve: The studios haven't provided an easy way for me to get their product online, so in a sense they are getting me into a habit of piracy.

David: And you're saying it's the record companies' fault that we're all trained to feel this way.

Steve: I'm saying what needs to happen is that the movie and television industry need to realize what's happening with Napster and start their own business model before this happens.

Tim: With Microsoft getting into the game with Ultimate TV, they got so many deep pockets to go after, they don't like the way it's going. I think Microsoft is pretty forward-thinking about business models. They think very hard about how to monetize anything they do. I think it is possible, if you have some forward-thinking, technologically astute people at the helm, we can in fact come up with technologies and business models that make this stuff pay off.

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