Berkman Center receives $600,000 digital media grant

BY ADINA LEVINE

The Berkman Center for Internet and Society received its largest research grant to date from the John D. and Catherine T. MacArthur Foundation for $600,000 for its Digital Media Project. The Garner/G2 and the Soros Foundation have offered additional support to this three-year project, which is exploring the future of copyright law in a globally digitized environment.

“It is so important because the outcome of this crisis has huge ramifications for the way in which the internet develops and the way in which intellectual property develops,” asserted John Palfrey, executive director of the Berkman Center. “In an economy that becomes more and more global, it’s a problem that’s only getting trickier and more and more interesting with time.”

“The music industry is currently in crisis,” commented Harvard law Professor William Fisher, principal investigator of the project. “Since 1999, both domestic and global sales have been falling at an accelerating pace.”

Fisher continued, “One source of the problem . . . is that unauthorized reproduction and distribution of sound recordings over the Internet has increasingly eroded demand for CDs and other authorized recordings. The scale of this practice is remarkable. As Wendy Seltzer (a Berkman Center fellow) recently pointed out, more Americans have downloaded music from the Internet without permission than voted for President Bush. The film industry has not yet been hit so hard. But as the size of hard drives continues to increase, broadband Internet access becomes more widely available, and compression systems improve, it will likely suffer the same fate.”

The Digital Media Project will explore five different scenarios regarding the future of copyright law in a digital age. In consonance with Fisher’s upcoming book, “Promises to Keep,” set to be published in Spring 2004, the analysis of the five different scenarios will examine the economical, business-related, and legal or regulatory repercussions of each given model.

“The purpose of the Digital Media Project is to identify combinations of legal reforms and business models that might enable us to solve the problems afflicting the music industry and to avoid similar disasters involving other forms of digital media,” asserted Fisher. “More specifically, our goal is to identify mechanisms that would enable us both to take advantage of the enormous economic and cultural opportunities created by the new technologies and to ensure that the creators of the products from which we all benefit are fairly compensated.”

“Hopefully we’ll inform decision makers how to get out of this problem,” commented Palfrey. “The goal is to play the role of an honest broker and point toward an alternative that might be greater overall.”

The first scenario is a continuation of the status quo, where there is no change in the law, but technology continues to evolve. Using precedent such as Apple’s itunes music service, the Center will explore whether it is possible for copyright owners to profit from digitalization without any legal adjustment.

“Nobody really likes this scenario,” observed Palfrey. “For reasons of inertia, it may survive.”

A continuation of the status quo would not solve the industry’s problems. “The legal system has not done much to alleviate the problem,” observed Fisher. “Indeed, many of the changes in copyright law adopted during the past 13 years in hopes of meeting the challenges posed by the new technologies have made things worse, not better.”

The second option is referred to as the “Taking property rights seriously” choice. Under a model where the legal status of copyright infringement is equated with property infringement, the consumer pirating of internet songs, for example, would be treated stringently.

“This gives greater rights to those who hold copyrights, the artists or distributors,” Palfrey ascertained. “But it’s more restrictive for consumers.”

Similarly, the third option of “Technology defenses work” creates an inherent block to the dispersal of copyrighted work, but technology would create the barrier instead of the law. Technology could create an intrinsic locked-down version of the song the artist produces, such as already exists in DRMs (Digital Rights Management), or via interdiction, by overusing the peer network to insure that the song is not available for pirating.

“I’m highly speculative whether there is one [form of technology] that could do it,” commented Palfrey.

“Technologies can serve as roadblocks, stumbling blocks that you could stop somebody from using your song for a certain amount of time.”

Despite Palfrey’s opinion that technology itself may prove inadequate to permanently forestall the infringement of copyrighted materials, Professor Charles Nesson believes that the inherent solution to the internet and copyright dilemma lies in this option.

The fourth alternative is known as the public utility scenario, where consumers pay a price to the utility company in exchange for services.

“This way, you give to the artist and distributors, but take away some of what they have through regulations,” asserted Palfrey.

The fifth solution, the “most dramatic” one, consists of creating an alternative compensation system. In such a system, either state-controlled or voluntary, Professor Fisher envisions a pot of money, approximately two million dollars, that will pay the artists per popularity. Since it is digital, the system would be able to count the number of times that people enjoyed the songs and the movies – and pay the artists in proportion to the amount of times that people enjoyed their work.

“This would get rid of the inefficiencies within the system and compensate artists more fairly,” asserted Palfrey.

To create such a pot of money, there would need to be a tax, either through an income tax or on specific devices, such as the hardware that creates the song in the first place, the hardware that plays the song, or on internet access (Fisher estimates a charge of about $5 per family per month would suffice to establish such a fund).

“It would be replacing copyright with an entirely different way of compensating those who create entertainment,” commented Palfrey. “At the end of the day, consumers would have a lot more choice and you would avoid this problem of people violating the law, and then getting sued for it.”

Though the $600,000 grant only became effective October 1st, the Berkman Center has been doing background research for this project for a year. Through surveys conducted with Garner/G2, the first prong of the research focused on consumer behaviors and consumer reception that paved the way to the grant proposal.

“Last year was the skunkwork, the quiet phase of project,” reflected Palfrey.

The Soros Foundation is supporting the globalization aspect of the project, including the financing of the international experts that will be attending a December 5th workshop, hosted by the Berkman Center, discussing alternative compensation systems.

“We are likely to hold a second workshop soon thereafter to discuss possible technological solutions,” predicted Fisher.

Harvard professors, however, are not united in their anticipations of the best solution. While Professor Nesson supports the technology model, Professor Fisher advocates an alternative compensation model – a disagreement that Palfrey expects to give their research more credibility.

“It helps our credibility a great deal that we don’t have one set agenda but are well poised to produce an objective body of research that policy makers can rely on,” asserted Palfrey. “This is a great opportunity for us to have impact through scholarship.”

As the largest grant that the six-year old Berkman Center has ever received, the Center plans to place this project on “top priority.” To that end, the Berkman Center plans to hire two new research fellows, one to research the business repercussions of the five scenarios and one to research the economical aspects.

“It’s not necessarily more i
mportant that some of our other ventures – such as providing advice to several developing countries concerning how they might most effectively deploy information technology and reform their associated legal systems,” opined Fisher.

The crux of the funding will go to the researchers, but, in the event that an alternative compensation system is deemed to be the most feasible, the Berkman Center plans to initiate an entertainment coop to attempt to model an alternative compensation system.

“In generating our final report, we may create or participate in some pilot projects, which would test (probably on a small scale) versions of the alternative models,” stated Fisher.

“You always have to be part of what you’re studying,” asserted Palfrey.

Harvard Law School’s Berkman Center for Internet Society is a research program founded to explore cyberspace, including numerous faculty members and approximately 20 students. The current project involves eight students, including Harvard law students and undergraduates.

“I am always encouraging more student involvement,” advocated Palfrey. “We have a very good team, but I suspect we can use a few more.”

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