HITS Daily Double


License Proposal and Moneymaking Results are Building a Home for Online Downloading
With Napster on the verge of bankruptcy, a life-saving proposal could be on the rise, as other music-swapping networks continue to rise out of its ashes.

Tech heavy Verizon Communication has proposed "cumpulsory licensing," which could make song downloading legal. The idea has been around, opposed by labels and movie studios, but until recently, only backed by file-swapping companies. Verizon could give the significant influence the proposal needs.

Though the proposal will have to face off with copyright policies set since the landmark law Digital Millennium Copyright Act (DMCA) in 1998, file trading is still debated as a powerful force in driving consumers to broadband technology—and ISPs are not truly prepared to let that go.

A file-swapping compulsory license would allow consumers to download or use works on demand, the way radio stations use music. They find it, keep track of the music, and pay royalties to songwriters and publishers, without asking. Just as webcasters have a compulsory license to stream (though they are currently battling over how much to pay). The concept is in its early stages, but strong alliances are forming that bring peer-to-peer network Kazaa parent Sharman Networks into the fold.

Another option is an Intellectual Property Fee (IPUF), which would pay record companies and artists for music downloads by adding small user fees into ISP subscription costs, CD burners or the like, where these funds would go to the artists and labels.

Still, with these plans and ideas, troops of home pirates are swapping music, and Morpheus, Kazaa, Grokster and other networks are cashing in. More than 2.6 million computers are connected to these networks, and advertisers are flocking to the networks. According to several reports, these peer-to-peer file-sharing networks can deliver massive amounts of advertising to audiences that rival that of network television. CNet reports that even Columbia House DVD Club, a venture co-owned by Sony Corp. and AOL Time Warner Inc., advertised on Morpheus, despite the fact that both companies are suing the service for copyright infringement.

Unlike Napster, however, the peer-to-peer system has decentralized networks that prevent the companies from knowing or controlling what their users do, so they can't be held liable if users make pirated copies. When Napster began blocking the flow of copyrighted songs last year, its users switched over to the peer-to-peers, and the numbers are still growing.