Creative work makes for slippery private property online

While iTunes has sold 300 million songs online in its first three years, some 750 million songs are traded for free online each month, according to estimates by BigChampagne, a firm that tracks file-sharing on the Internet. Those p2p trades are illegal, according to current law.

P2p lies at the heart of a case argued before the US Supreme Court Tuesday. In MGM v. Grokster, lawyers for the entertainment industry and others argue that p2p software such as Grokster is used almost exclusively for illegal sharing of copyrighted material, such as songs. They want it shut down or hemmed in by strict safeguards.

Those supporting Grokster, mostly from the high-tech community, argue that such restrictions would inhibit future technological innovation and creative energy. They say that the software has legitimate uses.

The Grokster case will turn on one issue: whether the technology has substantial uses that are legal uses, says Manny Pokotilow, the managing partner of Caesar, Rivise, Bernstein, Cohen & Pokotilow, an intellectual property law firm in Philadelphia.

In a narrow 5-to-4 decision in 1984 involving the Sony Betamax videocassette recorder, the Supreme Court said Sony wasn't liable if some people used the machine to make illegal copies because the technology had substantial legal uses as well.

With Betamax as precedent, Mr. Pokotilow isn't so sure the argument from the entertainment companies will hold up. "To me, someone could have enjoined the use of the Xerox machine when it first came out," he says, because it could be used to make copies of copyrighted materials.

If the court does crack down, and if entertainment companies continue to sue individuals who use p2p, Buckman says, he expects a boon for his business. "The harsher the atmosphere is for pirates, the more angry they will be, and the more they'll seek out fairer alternatives," he says.

Buckman operates under a unique kind of copyright called Creative Commons, developed by Stanford University law professor Lawrence Lessig, in which "some rights reserved" is the operating principle. Under Creative Commons, artists can choose to relinquish all rights (release to the public domain) or keep some, such as requiring attribution (giving the author credit). They may ask for permission and payment for commercial use, but not for noncommercial use. And they can mandate that the user agree to "share alike," meaning that if the work of art is used to help create a new work (such as a new song), that new work of art has to allow others to use it in the same way.

More and more companies springing up will recognize the new economics of copyright, Zolli says. "Some of them will flame out badly. Some of them will go down and take some of their customers with them.... But a new crop of companies will eventually emerge to take advantage of the participation and create economic value out of it."

One successful model already exists in Amazon.com, he says. "Amazon actually puts huge amounts of their intellectual property [online for free]. You can read many of the books that you can buy from Amazon right on the website."

Letting customers sample content creates new demand and not just for a few blockbusters. Some 90 percent of the books listed on Amazon.com sell fewer than 1,000 copies each, he says. People are "buying books they've never heard of" until Amazon.com introduced them.

The technique isn't new, Buckman says. "Music has always been given away for free to create demand." It's been sold through being played on the radio and more recently through music videos on MTV or free CDs stuck into magazines. "All we're doing is giving it away through a different medium," he adds.

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