Testimony of William W. Fisher III

before the
Subcommittee on 21st Century Competitiveness
Committee on Education and the Workforce

Hearing on:
The Internet and the College Campus: How the Entertainment Industry and Higher Education are Working to Combat Illegal Piracy

September 26, 2006

The problem we are discussing today is serious. Since 1999, large numbers of students at most American colleges and universities have been using peer-to-peer (P2P) file-sharing services to exchange, without authorization, digital copies of copyrighted works. Successful lawsuits brought by the copyright owners against some of the early services (e.g., Napster, Scour, Aimster, and Grokster), plus over 15,000 lawsuits brought against individual students, have curbed this activity to some degree. But new P2P systems (e.g., eDonkey, BitTorrent, myTunes, Direct Connect) continue to appear, and, by most accounts, their use by students remains common.

Colleges and universities have been struggling for several years to determine the best way to deal with this behavior. Deciding upon the optimal response is difficult because it requires the universities to balance six competing considerations:

First, at present, the large majority of the ways in which students employ most P2P systems are illegal. Most of the material distributed through those systems consists of audio and video recordings, the copyrights in which are owned by organizations that object to their circulation. When a student uses a P2P network to “download” a copy of such a recording to his or her computer, he or she violates section 106(1) of the Copyright statute; when a student “uploads” a copy of such a recording to the system – i.e., sends a copy to another user – her or she violates section 106(3) of the statute. On occasion, for reasons discussed more fully below, such a violation is excused by other provisions in the statute, but those excuses are inapplicable to the large majority of acts of downloading and uploading. In short, most of the students’ activities are unlawful, and universities have an interest in curtailing those activities, just as they have an interest in curtailing underage drinking or illegal drug usage by their students.

Second, the frequent use by students of P2P systems to obtain music and films places heavy loads on universities’ information-technology networks. Strengthening the networks so that they can bear those loads and still provide students, faculty, and staff the research and communication services for which they were originally built is expensive. For obvious reasons, the universities would like to reduce those costs. The most direct way to do so is to curb students’ use of the systems to gain access to entertainment.

Third, a small but growing percentage of the material that students and faculty obtain on P2P services consists of recordings that either are no longer covered by copyright or have been placed on those services voluntarily by copyright owners. Downloading such materials is lawful. Here are some examples:

a) A growing group of artists – among them, Wilco, Janis Ian, Pearl Jam, Dave Matthews, and John Mayer – have licensed the distribution of some of their recordings through P2P networks.

b) Project Gutenberg, a large online library of digital copies of books that are in the public domain (typically because copyrights in them have expired) encourages the distribution of its holdings through P2P networks.

c) The owners of the copyrights in many more recently created books and sound recordings have released them to the public under “Creative Commons” licenses and encourage consumers to share them through P2P systems. A partial list of such works may be found on the website, “Legal Torrents.”

d) Many open-source computer programs are distributed with permission through BitTorrent, one of the more popular and efficient P2P systems.

e) Warner Bros. recently announced a plan to “make hundreds of movies and television shows available for purchase over the Internet using BitTorrent software.”

f) The Digital Bicycle system, soon to be released to the public, will enable the creators of programming for local-access television stations to distribute their works both among themselves and to wider audiences via BitTorrent.

Fourth, some uses of P2P services, although they involve unauthorized sharing of copyrighted material, are nevertheless lawful – typically because they constitute “fair uses” within the meaning of section 107 of the Copyright statute. For example, teachers of film-studies courses and their students, when preparing lectures or doing assignments, frequently must use unencrypted digital copies of movies. If they are unable to obtain them by removing the CSS coding that protects DVDs containing the movies (a practice that violates the Digital Millennium Copyright Act), they sometimes get them through P2P systems. That practice, because it is noncommercial, “transformative,” and educational in character, most likely qualifies as a lawful “fair use.” The percentage of P2P traffic that currently consists of privileged behavior of this sort is very small. But, as more and more educational activities come to depend upon transformative uses of digital media, the percentage will grow.

Fifth, P2P systems are being employed for entirely legitimate purposes increasingly often by the universities themselves and by businesses and government agencies outside the universities. For example, the LionShare project, developed at Pennsylvania State University, uses P2P technology to enable “faculty, researchers, and students to trade photos, research, class materials, and other types of information that may be not be easily accessible through current technology.” The Coral Project, developed at New York University, likewise uses P2P technology to enable website operators inexpensively “to run a web site that offers high performance and meets huge demand.” The Department of Homeland Security uses the JRIES (“Joint Regional Information Exchange System”) P2P file-sharing system to communicate sensitive but unclassified information among its regional offices and other government entities. The IRIS (“Infrastructure for Resilient Internet Systems”) Project, sponsored by the National Science Foundation, uses P2P architecture to support large distributed computing applications that are resilient to “denial of service” attacks. Even the Department of Defense is relying upon P2P technology when developing “large-scale, highly distributed, mobile networks-of-networks that are increasingly wireless, deal with time-critical problems, and face potential attackers who are extremely dedicated and sophisticated.” Of course, none of the ventures mentioned in this paragraph is employed by students to exchange commercial audio and video recordings, and no one is suggesting that the universities should block access to these projects. Nevertheless, students argue that, when they graduate, they will be better prepared to work with and contribute to the proliferating enterprises of this general sort if they are already familiar with parallel technologies developed primarily for the exchange of entertainment. This argument is flimsy as applied to simple services like the original Napster, which taught their users little. But it gains force as applied to the more complex and flexible modern services.

Sixth, most universities wish to respect the privacy of their students. Monitoring what they read or the content of their conversations would plainly be inappropriate – and in some instances would be illegal. For similar reasons, most universities are justifiably loathe to scrutinize what their students are watching or listening to in the form of entertainment.

The first two of these factors, it should be apparent, provide universities good reasons to curtail file-sharing or to block it altogether. The other four factors, however, set limits on their ability or willingness to do so.

In the past few years, American universities have developed and deployed a wide variety of tools to aid them in their efforts optimally to balance these competing considerations. Here are the primary ones:

a) Education. The large majority of American colleges and universities now provide their students information concerning the illegality of unauthorized P2P file sharing of copyrighted materials. The methods by which they inform their students vary. Most have adopted and have posted on their websites university policies on the subject. Large numbers incorporate presentations on the subject in their freshman-orientation programs. Many distribute videos and posters. At least one (the University of Virginia) requires students to take a quiz, which includes questions about file-sharing, before they are granted network access. Most use a combination of these methods.

b) Enforcement. Many schools back up their policies against illegal file-sharing with serious sanctions. One commonly used system is the so-called “three strikes” approach. A student caught violating the policy for the first time receives a formal warning. If caught for a second time, his network privileges are temporarily suspended. If caught for a third time, his privileges are suspended indefinitely. Other schools permit students only two “strikes.” UCLA employs a “quarantine” system, under which students caught file-sharing illegally are disconnected from the school’s network until they sign an electronic statement verifying that they have removed the infringing files. A few schools have gone so far as to raid the dorm rooms of students who engage in illegal file-sharing.

c) Network access limitations. Some universities limit the amount of bandwidth their students may use in an effort to curtail the downloading of large media files. Students who exceed the limit receive warnings and may have their network privileges revoked. Schools that have employed this strategy include the University of California at Berkeley, Pennsylvania State University, Vanderbilt, Central Michigan University, and the University of Texas at Austin. At least one college outside the United States – Churchill College of Cambridge University – has adopted the same approach. Though helpful in reducing loads on the universities’ networks, this strategy has the disadvantage of curtailing students’ access to large files lawfully available through P2P systems (or elsewhere on the Internet).

d) Filtering. A small group of universities use software to try to prevent their students from downloading material they shouldn’t. Two technologies are now available to schools that want to go this route. “Icarus,” developed at the University of Florida, is a network-based system that blocks the transmission of any information bearing the signature of a P2P application. “CopySense” is a network filter that scans song files, hunts for digital fingerprints of copyrighted recordings, and stops file transfers when it finds matches. Both have advantages and disadvantages. Icarus has virtually eliminated P2P traffic at the University of Florida. Unfortunately, a side effect has been to block all lawful downloads (of the sorts discussed above) from the forbidden services. CopySense is more precise but also more intrusive. Roughly 40 schools now employ it, but they have been criticized by their students and others on the ground that the system invades students’ privacy. The University of Wyoming, swayed by this criticism, discontinued use of the system.

e) Legal Alternatives. A rapidly growing group of schools are attempting to wean students from illegal file-sharing by offering them inexpensive, legal ways to download copyrighted recordings. Pennsylvania State University pioneered this strategy, striking a deal in 2003 with the reformed version of Napster to provide its students free access to Napster’s catalogue of recordings. Other companies that have struck analogous deals with other schools include Cdigix, Ruckus, MusicRebellion, and Apple. Over 70 universities – among them, the University of Southern California, the University of Miami, George Washington University, Cornell University, Middlebury College, Wright State University, Yale University, Duke University, Wake Forest University, the University of Colorado at Boulder, Ohio University, DePauw University, and Northern Illinois University – now offer their students legal options of this sort. One of the advantages of this approach is that, by relying on carrots rather than sticks, it avoids the frustration – often likened to a “Whack-a-Mole” game – experienced by copyright owners and their representatives when stamping out unlawful P2P services, only to see new services spring up in their place.

At the same time as the universities have been experimenting with strategies of these various sorts, the legal and economic background has been changing. The high-profile lawsuits brought by the entertainment companies both against individual file-sharers and against P2P services (including the decision of the Supreme Court in Grokster) have increased sharply public awareness of the illegality of the activity. Simultaneously, a rapidly growing group of companies have begun offering consumers convenient, inexpensive ways to download music and films lawfully. Some of these companies (e.g. the Apple iTunes Store) charge for each download. Others (e.g., Rhapsody; some of the variants of MTV’s new service, URGE; and Starz’ new movie distribution site, Vongo) allow subscribers to download or stream large numbers of files for a flat monthly fee. Still others (e.g., YouTube and the new NBC Broadband service) are “free” to consumers, but rely on advertising revenue to compensate creators. Students have been taking advantage of these opportunities in growing numbers. A survey conducted recently by the Intellectual Property Institute of the University of Richmond revealed that the percentage of American college students who download recordings from the authorized, for-fee services (39%) is now larger than the number who download recordings from the unauthorized free services (34%).

As should be apparent from the foregoing analysis, at least four dimensions of the problem of campus P2P traffic are in flux: First, the nature of the unauthorized P2P services that students employ is constantly changing. As some are shut down, others, employing different architectures, emerge. Second, the set of lawful uses of those services continues to increase, thus raising the costs associated with blocking access to them altogether. Third, the technologies available to universities that enable them to limit their students’ access to these services – or to employ them in improper ways – are changing rapidly. Icarus and CopySense are quite new applications. Each, as we have seen, has important drawbacks. Others, more subtle and precise, are likely to emerge in the near future. Fourth and finally, companies that enable students to obtain digital audio and video recordings lawfully are proliferating, and students are using them increasingly often. The problem of illegal file-sharing is far from over, but it may be abating.

In this environment of complex, competing considerations and rapidly changing technologies, it is crucial that each university remain free to select the combination of tools that it considers best, and to modify its approach when it sees fit. There is not – and cannot be – a single set of “best practices.” Instead, as the Education Task Force of the Joint Committee of the Higher Education and Entertainment Communities wisely observed, “[e]ach institution must decide on the combination of educational, technological, and disciplinary approaches that best meet its pedagogical, legal, and ethical needs and objectives.”

I would like to close my testimony by briefly describing a system that the Berkman Center, with generous funding from the MacArthur Foundation, is currently building that, in our judgment, could go a long distance toward solving this problem. The gist of the system is that it would legally provide consumers unlimited online access to copyrighted recordings, unencumbered by encryption, while ensuring that the owners of the copyrights in those recordings were fully and fairly compensated. Here is how such a seemingly improbable outcome could be achieved:

In each country in which the system were instituted, copyright owners (record companies, music publishers, film studios, etc.) would license a nonprofit private enterprise to distribute digital copies of their works. (The name of the enterprise would vary by country, but the name we have selected for Canada is Noank Media.) Noank Media would, in turn, enter into contracts with major access providers: Internet service providers (like Comcast or Verizon); mobile phone providers (like T-Mobile); and, last but not least, universities. Those contracts would oblige Noank Media to provide the customers, employees, and students served by the access providers unlimited downloading and streaming services. In return, each access provider would agree to pay Noank Media a certain amount each year for each of its customers, employees, or students.

To gain access to the Noank Media catalogue, each customer, employee, or student would download to his computer a simple software program, which in turn would connect him to a constantly updated index of all of the recordings within the system and provide him various ways (e.g., downloading from a central server, downloading through a P2P network, or streaming) of obtaining those recordings. In addition, the software program would count the number of times that each consumer listened to or watched each of the recordings he obtained (either on his computer or on portable devices dependent on that computer) and would periodically relay that information to Noank Media (much the way that TiVo machines regularly communicate with the TiVo company). That data would be be aggregated without revealing the identities of individual users, thus respecting consumers’ privacy rights.

The money collected from the access providers would be distributed as follows: 15% would be paid to a for-profit operating company, in return for developing and maintaining the technology, for negotiating the contracts, for marketing the service, and for running a dispute-resolution system that would fairly resolve any disputes over ownership of the copyrights on the works within the system. (This 15% is smaller than the percentage of revenues withheld for administrative purposes by any other collecting society in the world.) The remaining 85% would be distributed to the copyright owners in proportion to the relative frequency with which their works had been consumed during the preceding reporting period. (A chart showing how these various revenue streams and contracts interact is appended to this testimony.)

Notice that this system is entirely voluntary. Copyright owners would contribute their works to the system only if they decided that it was in their best economic interests. And their ability to withhold their works would give them considerable clout, collectively, when the rates that the access providers must pay are set and periodically adjusted.

That, in brief, is the essence of the plan. I would be happy to provide additional details if the Committee would find them useful.

The system is rapidly taking shape – not in the United States, where resistance to this approach has thus far been strong, but in other countries, most notably in Canada and China. In China, for example, we recently entered into an agreement with Tsinghua University (the leading technology university in the country, analogous to the Massachusetts Institute of Technology or the California Institute of Technology in the United States). Among many other things, Tsinghua oversees the development and management of the CERNET network, which provides Internet access to the roughly 20 million university students in China. Under the terms of our agreement, Tsinghua will not only help design and implement the independent Chinese version of Noank Media (called “Fei Liu”), but also will make the service available to all of the universities in CERNET network in return for the payment by each university of per-student annual fees. Once the system is fully operational, the revenue stream reaped by copyright owners from this one source alone could be quite large. Lining up access providers, like Tsinghua, is of course important, but equally important is ensuring that the system will contain a generous catalogue of recordings. So far, Shanghai Media Group, Radio Television Hong Kong, and Jingwen Records, each with very large holdings of audio and video recordings, have tentatively agreed to license to Fei Liu much or all of their catalogues for a trial of the system. We are actively pursuing other leads in this area.

To work, a system of this sort requires voluntary participation from all of the major sectors of the entertainment industry: copyright owners; artists; access providers; and consumers. Cooperation of this sort will be difficult to achieve. But if all sectors can be persuaded to join, they will all benefit. Consumers will gain unlimited access to recordings that they can play on any equipment and can freely share, while paying less, on average, than they currently do for much more limited material. Copyright owners and the artists whose interests they ultimately serve will make more money than they currently do. (The benefits to copyright owners are obvious in a jurisdiction like China, where “piracy” rates are currently very high. But, if the per-customer fees are set properly, copyright owners will also enjoy a substantial net benefit in jurisdictions like Canada or the United States, where “piracy” rates are not so extreme.) Finally, we will all benefit from elimination of the legal strife that has wracked the entertainment industry in recent years.

The purpose of the foregoing summary is not to persuade you that American universities should immediately adopt the Noank Media model. For various reasons, it will be harder and more time-consuming to implement the system in this country than in most other jurisdictions. Rather, my objective is to emphasize the rapid pace of innovation in this field. New potential solutions to the P2P crisis are emerging monthly. Universities must remain free to adopt the system (or combination of systems) that best matches their individual needs – and to change approaches when those needs or the possible ways of addressing them shift.