Digital Transmission Right – The Anti-DRM Proposal of Bennett Lincoff

So the big news today is the new open letter against DRM. If you don’t want to read a 28 page PDF white paper, keep reading; I have summarized the article’s most important points.

An IP law attorney named Bennett Lincoff has thrown his hat into the ring, but unlike everybody before him, he has offered a solution. Lincoff is suggesting introducing a new type of digital music distribution right  (“digital transmission right”). Here are its upsides:

• All other traditional distribution rights as applied to digital dissemination are abolished.
• Regular consumers can copy their own music to other devices or mediums without fear.
• Downloading non-DRM music would be the norm. No music would need DRM ever again.

But it doesn’t equate to unrestricted free distribution. And this is the key part.

• Any website that would be distributing music would need to obtain a license.
• Any centralized P2P network would need to obtain and license.
• Webcasts would need to obtain licenses.
• Users of social networking sites would need to obtain licenses unless the website already has one (key point).

How do the record companies make money? Consumers would flock to sites that have the newest, highest quality content where they can share and mingle. This means sites like MySpace, YouTube, and others would need to obtain licenses to continue to operate legally. Seeing as I just named two extremely popular web sites that largely owe their popularity due to copyrighted material, you can see how there is definitely a market for this. The record companies make money by selling this right to distribute to these services.

The juicy stuff starts on page 12. Here’s a blurb about lawful operation of such services:

Licensed services, being lawful, would be able to operate openly, attract investment capital (without exposing investors to copyright infringement liability), and offer users the most sophisticated functionalities. … Service providers who obtain through-to-the-user licenses would have a competitive advantage over those who do not even though they would be required to pay license fees. The availability of through-to-the-user licenses under the digital transmission right would provide a positive economic incentive for service providers to secure the authorization they need.

The above quote also mentions another key point in his proposal, the ability of service providers to obtain “through-to-the-user” licenses, which would essentially be a license authorizing its users to share with each other through its service. In other words, because the license is explicit and replaces the old rights, it is now very clear that not obtaining a distribution license would be stupid. Thus, he argues licenses would be adopted widely.

Operators of centralized P2P networks would be jointly and severally liable with their network participants who share recorded music with others on the network. … Alternatively, a single license held by the operator of the network could authorize all digital transmissions of the licensed recordings through the network.

This means P2P would stay alive. Consumers are able to share and download music without fear of having personal liability – if they are at a properly sanctioned website.

Let’s be clear here: he is not advocating a free file-sharing utopia where nobody pays a dime. He suggests that P2P sites may need to charge to offset this new cost. But let’s think about this. If I can download all the music I want every month, with zero liability, no DRM, at CD quality, the ability to copy and burn it to as many separate devices as I want, and it costs money… Well, it doesn’t sound too shabby, right?

And this means iTunes will still be around. Nothing about it would change except now you would be able to download music without DRM. It also means Rhapsody and other streaming services will be forever changed. This is because his proposal no longer distinguishes between streams and downloads. All that matters is that it was transmitted. Today, there is no difference between a stream and a download except usually the stream has more DRM in it.

I just touched on a very important concept that Lincoff stresses. Because consumers are now able to copy media for personal use without restriction, a whole new market would open up. iPods work with your DVR that works with your laptop that works with your car audio system that works with your computer that works with your Zune that works with… well you get the point. Right now,     interoperability between music devices is a huge obstacle that makes pirating more attractive than ever. He is arguing that with such barriers gone, new and innovating devices will flood the market, further pushing music into everybody’s daily lives, thus further increasing demand for legal channels to obtain the music.

This guy is smart, and has thought through his arguments. For example, he stresses how the natural ecosystem of the Internet will favor legal channels if this distribution model is used.

Decentralized P2P file-sharing networks, on the other hand, do not have network operators … Accordingly, each participant in a decentralized P2P file-sharing network would be responsible for securing authorization for their own conduct on that network. … And again, it stands to reason that the vast majority of consumers who are interested in P2P would likely seek out networks that had secured licenses that authorize their file-sharing activities…

A decentralized file-sharing network would stick out like a sore (and very liable) thumb because you as a user would be liable for whatever you share. Besides, why use such a service when there are other legal alternatives? Well, let’s be honest, some always people will. But through the logic of the above example, it’s clear that there will be a very strong demand for a legal downloading service.

Wait, but how is this different from today? I mean, it’s still illegal to be copying music over a decentralized network, right? Nothing is different!

Wrong. Sharing is legal on sanctioned web sites. Public perception will be different.

As in, YouTube could get a license letting users upload copyrighted content. Napster could buy a transmission license and exist exactly as it did in 1999 (assuming they can make the money back). It means my Rhapsody account lets me download whatever I want whenever I want.

Perhaps the most interesting point he makes is about litigation becoming accepted.

Under these circumstances there would be no justification for public outcry over the industry’s litigation campaign against those who continue to infringe.

He has a point. Pirating is less attractive than it has ever been. His solution both addresses the economic (convenience) and social (“it’s okay because the RIAA is greedy”) reasons people pirate. He argues that action is urgent by reminding the reader that (slow) broadband adoption rates are the only thing keeping pirating at a still relatively low point:

The worst outcome for the music industry would be if worldwide broadband penetration overwhelms the industry’s ability to police unauthorized distribution of recordings before a full, fair and feasible solution for the digital music marketplace is in place.

While I haven’t gone into it here, the last 10 or so pages are dedicated to discussing royalties. He has thought through how the royalty structure could work in a global digital economy. He suggests royalties are paid by assessing both where the transmission originates and ends. He also discusses how the royalties should be divided between the owners of the works. Amazing.

In short, his approach doesn’t just swing blindly at the music industry and DRM. Rather, he takes an intelligent, unbiased, and fair stance that shows that a true compromise can yet be reached. I like his solution, how about you?