Copyrights Versus Digital Rights

Depending on which side you listen to, a case before the Supreme Court could devastate technical innovation or the entire U.S. entertainment industry.

The justices heard arguments today in MGM v. Grokster, which pits America's movie and recording studios against companies that produce file-sharing software. At issue: whether the software makers can be held responsible when consumers use their products to swap copyrighted material like music and movies.

The list of petitioners for the entertainment industry reads like a who's who of Hollywood and music -- including Columbia Pictures, Warner Brothers Entertainment, Paramount Pictures, Twentieth Century Fox, Arista Records, Capitol Records, Motown Record Company, RCA Records and Sony Music Entertainment. Disney Enterprises and Walt Disney Records, part of ABC News' parent company, Disney, are also parties in the case.

During oral arguments, Justice Stephen Breyer worried that an entertainment industry victory might stifle wide-ranging innovations. But Justice Ruth Bader Ginsburg said that no matter how you look at them, file-sharing services facilitate copying.

The massive amounts of copying going on are what the entertainment industry is trying to fight. The movie industry says as many as 400,000 feature-length movies are illegally downloaded every single day. And those numbers could be just the beginning, Dan Glickman, chairman of the Motion Picture Association of America, said outside court Tuesday.

"We in the movie industry have not yet been as hard hit as the music industry, but it's coming, unless there are some boundaries set for this," he said.

The music industry, which has taken a huge hit from file-sharing, has even more staggering numbers. It is estimated that more than 2.6 billion copyrighted music files are downloaded each month.

The Recording Industry Association of America estimates record sales have dropped by about 20 percent in the last five years, largely blaming the emergence of file-sharing. And it says software providers are to blame.

"These are business models predicated on theft," said Mitch Bainwol, chairman of RIAA. "It's a theft of our property, and the theft of the genius of song writers, musicians and writers -- and it's just wrong."

Beth Nielsen Chapman, who has penned songs for Bonnie Raitt and Willie Nelson and co-wrote the Faith Hill hit "This Kiss," agreed. She said the technology has already put many of her colleagues out of business.

"It's extremely important that there be a defined source of income for the creators of intellectual property," Chapman said. "Without that, they're going to just have to do something else. You know, you have to earn a living."

A few songwriters who gathered at the Supreme Court today sang a similar song, arguing that America's musical and cultural fabric could depend on this case.

"We probably would've never heard of Motown, the Beatles and a whole lot of other people, whoever, because they would've gone and done other things to make a living," said Lamont Dozier, who co-wrote the Supremes' hit "Stop! In the Name of Love."

But the software makers in the case -- Grokster and StreamCast Networks, which produces the file-sharing software Morpheus -- argue that they cannot control the activities of their users. They say their decentralized computer networks mean that once consumers download their software, they are no longer involved in the transaction. As far as the companies are concerned, that means they cannot be held responsible.

"There's no way for us to monitor what they're doing, there's no way for us to stop what they're doing," said Mike Weiss, chief executive officer of StreamCast Networks.

Weiss says he does not condone the illegal file-sharing that some users may be engaging in but says the entertainment industry should embrace the technology to provide legal content people will want to buy. He describes these "peer-to-peer" networks -- known as "P2P" -- as today's radio.

"The sooner they work with us and embrace it, the sooner they'll make more profits, the sooner their artists will get paid," Weiss said.

Several corporate powerhouses have weighed in on the side of technology in the case, including Intel, AT&T, MCI, Sun Microsystems and Verizon. Technology advocates worry that a decision for the entertainment industry will create a dangerous precedent for the future of innovation.

"What we're worried about is the precedent that anybody who designs a technology that can be misused might have liability," said Alan Davidson with the Center for Democracy and Technology.

But the general public may disagree. A recent Pew Internet poll found 49 percent of Americans believe that companies that operate file-sharing networks should be held responsible for the illegal sharing of copyrighted material. Among Internet users, the number was slightly higher, at 53 percent.

The Pew study also found that among young adults aged 18-29, 30 percent say they have shared files with other Internet users online. Not surprisingly, young people lead the way in the file-sharing trend -- people like Michael Sanchez, 23, of Albuquerque, N.M. Sanchez downloads two to three times a week from file-sharing sites and is an unashamed participant in P2P networks.

"People my age don't see it as a crime," Sanchez said. "There's nothing wrong with it. There's no viable alternative to it."

Sanchez said sharing digital music does not necessarily mean buying fewer CDs, as the music industry would argue, but he says it has made his CD purchases more discerning. But he also says it has introduced him to bands he otherwise would not have heard of were it not for digital file-sharing.

An opponent of what he sees as the mainstream recording industry's monopoly, Sanchez goes out of his way not to purchase CDs produced by the RIAA. He says he is not trying to hurt the artists whose works he downloads but that the technology is here to stay.

"I definitely seethe argument on the other side -- people are trying to make their living," Sanchez said. "But to argue that we should squash this new technology is, I think, ludicrous."

Both sides are eager to see how the court rules in light of a 1984 decision by the Supreme Court in a similar case, Sony Corporation of America v. Universal City Studios et al. In that landmark case, known as "Sony Betamax," the court disagreed with movie studio claims that the advent of the home video recorder would ruin their business by allowing users to record copyrighted shows and movies at home. The court found that Sony could not be held responsible for selling a legal product that could be used by some for illegal purposes. The software companies in the Grokster case hope that today's court justices -- 21 years after the Sony decision -- will agree.