"Wait!" you exclaim. "Am I reading the wrong magazine? Isn't this computer stuff supposed to be in AVN Online?"
Go ahead, check the cover .... See, this is Adult Video News. And you are reading it probably because you are an adult-product retailer, wholesaler, manufacturer, producer or one of the many other functionaries involved in the production or distribution of adult video product. This is about your livelihood.
This is becoming Legal Commentary's favorite "I told you so" story, because, in May of 1999, when industry heavyweights converged in sunny Cancun, Mexico, to discuss a variety of issues facing it, Messrs. Bob DePiano, Paul Cambria, Jeffrey Douglas and this author were pressed into service to forecast what was to come in the legal arena, and the core topic was the grim specter of a Republican president succeeding Mr. Clinton. Unfortunately, that indeed came to pass.
Aside from that, however, this author mentioned the growing problem of the propagation of the industry's product over the Internet, in response to which pundits shot back, "DeWitt is an idiot! Go back to law and stop playing computer scientist." They flooded AVN's Website with messages containing equations about bandwidth and other explanations about why this was nothing to worry about. After all, just about all adult Web sites could do then were TPG galleries that, thriving as they were, did not at all threaten adult videotape product.
However, fueled by dot-com venture capital, engineers around the world were working away to wire the globe with high-speed Internet connections that would blow to smithereens the pundits' criticisms of DeWitt's gloomy forecast. And we now know better. The 56kbps dial-up gave way to 300kbps DSL line to 500 kbps cable modems, all equipped with new and souped-up compression technology, and hard-disk capacities that began being measured in giga- and terabytes instead of megabytes.
Voila! Downloading a 50 megabyte video scene - which is about the size of a good-quality, 10-minute clip - became as quick and easy as was downloading a 3-meg song back in the dial-up days; maybe even moreso. Netsters everywhere, already accustomed to downloading CD-quality songs, now could make their own VHS- to DVD-quality custom comps, with all their favorite action right there on their hard drive. That, by the way, is nothing compared to the downloading of full-length, first-run motion pictures - which now is creating a huge headache in Hollywood - that are in files with dizzying sizes, sometimes exceeding a whopping 1,500 megabytes! By comparison, a 50-megabyte porn vignette is chump change.
The battle started with Napster, which suddenly facilitated mass song-swapping. A war ensued, pitting the recording industry - which suddenly became the only component of the entertainment industry that was experiencing a downturn in business - against the core music audience, a younger set that was always strapped for cash, that was tired of paying 20 bucks for a CD just to get one song and that was, most significantly, for the most part very computer-savvy.
According to the Recording Industry Association of America (RIAA), music sales grew from around $12 billion in 1994 to roughly $14.5 billion in 1999, and then plunged back down to below $12 billion by 2003. (Those are interesting numbers, given that the total adult industry has been measured at $10-billion-plus!). In other words, adjusted for inflation, sales of recorded music grew about 7.5 percent between 1994 and 1999; and then from 1999 to 2003 plummeted over 26 percent, to a level over 20 percent below what it was in 1994! RIAA claims that to be no coincidence and that the drop was entirely driven by computer file swapping. It has a point.
As a consequence of this, RIAA declared war on Napster, filing suit in 1999 - and likely not imagining what a devastating impact Napster and its progeny would have on its business in the years that would follow. After three years of fierce litigation, the courts finally drove a stake into the heart of Napster when a federal court of appeals upheld the trial court's final shut-down order. A & M Records, Inc. v. Napster, Inc., 2000 W.L. 1170106 (N.D. Cal. August 10, 2000) Aff'd. 239 F.3d 1004 (9th Cir. 2001) on remand, 2001 WL 227083 (N.D. Cal. March 05, 2001) Aff'd. 284 F.3d 1091 (9th Cir. 2002). The courts had found Napster guilty of masterminding copyright infringement and ordered it shut down, just as could be done to a direct infringer.
The key to the Napster shut-down order was the fact that the "Napster system employed a proprietary centralized indexing software architecture in which a collective index of available files was maintained on servers it owned and operated. A user who was seeking to obtain a digital copy of a recording would transmit a search request to the Napster server, the software would conduct a text search of the centralized index for matching files, and the search results would be transmitted to the requesting user. If the results showed that another Napster user was logged on to the Napster server and offering to share the requested recording, the requesting user could then connect directly with the offering user and download the music file." MGM, infra, 380 F.3d at 1159.
Napster was a direct link in the chain of every file swap. The consequences of that architecture were (1) that Napster was involved in every one of the millions of the copyright-infringing file swaps and (2) turning off Napster would stymie all of the Napster system's file-swapping capabilities. The court turned off Napster, although it now has re-emerged, touting itself as a legal and fully licensed source of digital music (napster.com). Aimster, which is based upon similar architecture, was also shut down. In re Aimster Copyright Litigation, 334 F.3d 643 (7th Cir. 2003).
The file-swapping systems that came into being after Napster and Aimster, however, operate a little differently, although you wouldn't know it looking at your computer screen. But the subtle difference has sent the copyright owners down in flames in their efforts to persuade the courts to shut them down.
"Under a decentralized index peer-to-peer file-sharing model, each user maintains an index of only those files that the user wishes to make available to other network users. Under this model, the software broadcasts a search request to all the computers on the network and a search of the individual index files is conducted, with the collective results routed back to the requesting computer." MGM, infra, 380 F.3d at 1159.
Unlike Napster and Aimster, the new systems, most popularly Kazaa and Morpheus, the villains that the copyright industry is chasing, are not "in the loop" of an illegal file swap. Thus, when the recording industry, and later the motion picture industry (which itself was beginning to fall victim to the ability of computers and Internet system to swap 500 megabyte files), marched off to court to shut down the new systems, they fell short because of their passive involvement in the swapping. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster Ltd., 380 F.3d 1154 (9th Cir. 2004)("MGM").
How could this be? The court emphasized that, unlike Napster, the new formats left the infringers free to swap files without any involvement from the software. In fact, the court observed that it could shut them down, and the activity would continue. Unlike Napster, which could "disconnect" a subscriber and whose computer system was an integral component of the file swap, the new technology was independent.
In response, the recording industry members have done a number of things. First, they have sued hundreds upon hundreds of individual file swappers, like the hardened criminals, er, college students that swap files from their dorm rooms. Second, they have petitioned the Supreme Court to change its interpretation of the copyright law so as to allow actions against these passive infringers like Kazaa. MGM, supra, Petition for Certiorari Filed October 08, 2004 (No. 04-480). Third, they are all over Congress for a re-write of the copyright laws to do other things. Their first attempt was to push for a self-help law of sorts, allowing anyone victimized by copyright infringement to assault with impunity the computer of the guilty party - viruses, for example, transmission of which otherwise is illegal. More recently, however, they have been pushing for an amendment to the Copyright Act so as to overturn the MGM decision, something Congress clearly has the power and incentive to do. Even the far-right-wing American Conservative Union, which previously has had nothing to say about copyright, put out an encyclical to its members supporting the change in the copyright law.
Your interest in this is clear. It has been estimated that over 40 percent of all file swapping is in adult video clips. What Napster did to the recording industry after 1999 is exactly what the current file-swapping networks are doing to you - now! And the problem can only get more severe.
(Clyde DeWitt is a partner in the Los Angeles-based, national law firm of Weston, Garrou & DeWitt. He can be reached through AVN's offices, at his office at 12121 Wilshire Blvd., Suite 900, Los Angeles, CA 90025 or over the Internet at [email protected]. Readers are considered a valuable source of court decisions, legal gossip and information from around the country, all of which is received with interest. Books, pro and con, are encouraged to be submitted for review, but they will not be returned. This column does not constitute legal advice but, rather, serves to inform readers of legal news, developments in cases and editorial comment about legal developments and trends. Readers who believe anything reported in this column might impact them should contact their personal attorneys.)
