Shootout At The P2P Corral

What do you get when you put representatives from the RIAA, MPAA, KaZaa, Morpheus, and eDonkey into a room and tell them to discuss P2P and copyright issues? Sparks, and lots of 'em. Unfortunately, you also get the feeling that we're not much closer to an accord between the groups than we were two or three years ago.

With a roster that included Matthew Oppenheim (formerly of the RIAA), Michael Weiss (Morpheus), Sam Yagan (eDonkey), economists Stan Liebowitz and Koleman Strumpf, and MPAA head Jack Valenti, the Cato Institute's eighth annual Technology and Society Conference focus was on "The Law and Economics of File Sharing and P2P Networks." I was able to attend the conference, held yesterday morning at Cato's HQ in Washington, D.C., and thought I'd share some of my notes and thoughts from the conference with the other BlogCritics and our readers.

The first speaker of the morning was Rep. Rick Boucher (D-VA). He shared some thoughts on P2P and copyright in general and also addressed legislation that is pending in Congress. Among his points:
* When considering P2P and copyright we must keep P2P in the proper context: it has many good uses by moving us beyond the old client-server framework. Some in Congress blame the technology, but this isn't the right approach.
* He doesn't buy the argument that the loss of CD sales is entirely the fault of P2P. The price of CDs and the industry's stubborn refusal to offer other ways to buy music besides via CD are also to blame. He also believes that there is a diminished product being put forth by the industry.
* One study whose results were released two months ago shows that file sharers are good customers of the recording industry. By enabling more sampling, P2P networks may actually be helping to sell CDs.
* The recording industry can compete with P2P. A survey shows that price is not as important to consumers as other consideratins, including quality of download and availability of a large number of titles. I-Tunes has proven this point.
* Things that must be addressed by the industry: downloads need to be permanent and portable--no tethered music. There needs to be a large inventory and high quality downloads, and it needs to be easy to use, for a reasonable price.
* He warned about legislation currently before Congress that would make the Department of Justice an educational agency in charge of "educating" consumers about copyright violations through P2P. It also contains criminal provisions that might serve only as a "trap for the innocent."
* He provided a brief overview of legislation he has introduced that would ensure Fair Use rights to digital media, by allowing individuals to bypass technical protections for legitimate purposes.

The first panel discussion of the morning dealt with the "Economics of P2P." It featured Liebowitz, Strumpf, Yagan, and Eric Garland from BigChampagne Media Measurement. Liebowitz discussed his time-series studies (more on those here) that show a relation between the rise of P2P and the decline in CD sales (post hoc fallacy, anyone?). He also critiqued the other studies in the field, including the study conducted by Strumpf, who spoke next. Strumpf has looked at data related to music sales, downloads, and popularity which suggest that there may even be a positive sales effect of using P2P technology. (His study can be found here.) Strumpf responded to Liebowitz's criticism by offering some of his own, saying that time-series studies are less accurate than the individual data that Strumpf uses in his own research. Time-series studies fail to take into account factors like increased DVD sales that might have contributed to the decline in DC sales. According to Strumpf, Liebowitz also fails to explain why, over the past nine months, file-sharing usage has remained constant, while CD sales have increased by about 10%.

Article Author: Bobby Allison-Gallimore

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