Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval

Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval


History

Additional Partnerships

Litigation & Ruling

Intellectual Property Rights

A House Divided

Issues & Strategies – Bertelsmann & Napster

Recommendations

Questions & Answers

Agenda


Founded in May 1999 by 19 year old Shawn Fanning.

Pioneered peer-to-peer file sharing creating one of the fastest growing and most frequently downloaded software applications in the history of the Internet.

Provides music enthusiasts with an easy-to-use, high quality network to freely exchange music files with other members of the Napster community.

Lawsuit filed in December 1999 by A&M Records later joined by Record Industry Association of America (RIAA) along with major music labels.

October 2000, Napster partnered with Bertelsmann AG to develop a membership-based service.

History


Edel Music and TVT Records joined Bertelsmann-Napster alliance in January 2001.

June 2001, Napster partnered with MusicNet, a music download venture involving AOL Time Warner, Bertelsmann’s BMG, EMI, and RealNetworks.

Signed commercial distribution deal with AIM (Association of Independent Music) and IMPALA (Independent Music Companies Association), two European organizations representing 150 European independent record labels.

Additional Partnerships


Litigation - Plaintiffs

Direct Infringement

Peers copying and distributing music files

Contributory Infringement

Napster facilitating the exchange

Vicarious Infringement

Any organization, corporation, or agency that allows the use of Napster’s services and the exchange of information through their networks (e.g. a university or office)


Litigation - Defendant Pencil Defense

Can be used to plagiarize, but has many other legal uses.

1984 Supreme Court Ruling, Betamax case

A new technology with substantial legitimate uses, and thus should not be shut down.

1992 Audio Home Recording Act

Allows people to transfer music online (applicable only to Digital Audio Tapes, not computers or the Web).

1998 Digital Millennium Copyright Act

As a “search engine” Napster has broad protection from copyright claims.


August 2000: District Court preliminarily prohibits Napster from facilitating the exchange of plaintiffs’ copyrighted music without express written permission of owners.

February 2001: Court of Appeals rejects Napster’s appeal of District Court ruling, finding that Napster’s actions constitute copyright infringement.

Ruling


Intellectual Property Rights

Many prominent examples of intellectual property rights issues.

AM & FM Radio

Audiocassettes

VCR/Betamax


Copyright has always been a point of friction between content and consumer electronics companies.

Entertainment companies versus electronics manufacturers

Entertainment companies: hold persons liable for copyright infringement to protect their traditional distribution channels.

Electronics manufacturers: freedom to introduce new products without fear of lawsuits for abetting copyright infringement.

In the Internet age, these conflicts have come to the forefront because of the rapid pace of innovation.

A House Divided


Two Sony groups differ with each other with respect to Napster's file-swapping service.

Sony Music is a vociferous plaintiff in the lawsuit against Napster, while Sony Electronics is a member of a trade association that filed a friend of the court brief on Napster's behalf.

Refers back to Betamax case

Napster more of a service than a device - not protected by the Betamax precedent.

Electronics companies concerned this puts manufacturers at risk for lawsuits.

A House Divided


Broader Issues

Copyrighting and the problem of eliminating piracy

SAFE i.e. copyrights must be Secure, Affordable, in the right Format, and Easy to use.

Network effects - a community of 80m users

Industry regulation


Partnerships and strategic alliances

MusicNet

PressPlay: Sony & Vivendi/Universal

Other Applications

Siemens

Current Strategies


Bertelsmann is the world-wide leading Internet provider among media companies.

Withdrew lawsuit against Napster upon partnership.

Napster and Bertelsmann will seek support from others in the music industry to establish Napster as a widely accepted membership-based service and invite them to participate actively in this process.

Bertelsmann hopes to gain:

Huge customer base

Revenue generating service

Equity stake

Bertelsmann & Napster


A Napster-like system as central hub

Ensure SAFE practices

New Pricing Systems

Subscription Models

Time-based Models

Volume Related Pricing

Value Pricing

Recommendations


If you can’t bill it, kill it!!!xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx If the glove doesn’t fit you must acquit. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Recommendations


Questions?


Cartoons


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Documents

Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval