There is a war going on in digital media, an awkward power struggle between the technology giants (Microsoft, Apple, Yahoo, etc.) and the RIAA, over the passing of the Internet Radio Equality Act. The webcasters seek Congressional relief from absurdly high royalty rates imposed by the Copyright Royalty Board (CRB) for transmitting copyrighted content that is vulnerable to stream ripping. Ironically, the leviathans brought the war upon themselves by favoring hardware over the creative arts. This conflict was entirely avoidable and can be ended by protecting American art and invention.
This is the story of Media Rights Technologies' (MRT) quiet battle over stream ripping while the recording industry and mega-corporations choose to dismember American copyright.
At the dawn of this new millennium, The Museum of Musical Instruments (MoMI) was created by Bianca Soros, historian and writer, and yours truly, to share the richness and diversity of the American experience, including streaming examples of iconic music throughout the centuries. In the summer of 2001, the popular website was hit with a cease-and-desist letter from the RIAA for copyright infringement, alleging damages of $150 million to their members. Upon further investigation it was discovered that Microsoft had circumvented The MoMI's copy protection, in an "upgrade" to the Windows Media Player.
We notified the RIAA of the circumvention and censored our exhibition music. The RIAA took no further action against The MoMI. For a time, Music at The MoMI went silent.
That very same year, Steve Jobs debuted the iPod in a last ditch attempt to save his company's failing fortunes. Apple embarked on a huge media blitz, which empowered and taught America's disenfranchised youth that it was OK to steal from the artists they loved. This transformed the RIAA from a respected standards body into an evil villain who would rather target grandmothers and sue college students than make Steve play fair. Jobs couldn't care less if he sells protected Fairplay songs or unprotected MP3s. In truth, only 10 songs per iPod sold are actually purchased at the iTunes store. He makes his money from devices made in overseas techno-sweatshops, not from distributing artists' works. Millions of iPods later, the Apple is rotten.
With the help of community funding, Bianca and I formed MRT in 2001 and assembled a talented team of engineers and experts on intellectual property. We built a robust solution to stream ripping for the digital age so we could again light up the Internet with America's cultural heritage, this time limiting copyright violation liability for users, content distributors and educational institutions. Microsoft and Apple told us that they didn't want to deploy our X1 SeCure Recording Control until they were forced to by the Entertainment Industry or an Act of Congress.
Early on, Cary Sherman, president of the RIAA, shared with me his dire prediction that the stream ripping of performance-based content would significantly impact digital entertainment revenues. Cary was right: according to recent MRT studies, stream rippers are growing at the rate of well over 15 million units per month, with over 250 million user downloads in the last few years, costing the entertainment industry $20 to $50 billion annually. The problem has now eclipsed P2P file sharing as the number one form of digital piracy.
There are currently over 250 different brands of stream rippers that support Vista. Microsoft has even built into the Vista OS a native ripper, called Sound Recorder, which will deaggregate performance-based streams of unlimited duration and convert them into unprotected WMA downloads, easily uploaded onto Zune players. This year, Microsoft's Q1 profit surged 65 percent to $4.93 billion, boosted by sales of Vista, while the Recording Industry's profits have plummeted.
On the non-licensed webcaster MySpace, the profile for The Fray, a popular band signed by Sony, tallies over 48 million interactive performances of their content and 0 downloads. Rendered by the unprotected Adobe Flash Player, each of those performances can be stream ripped. At the iTunes store, Fairplay protection can be easily stripped away, creating unprotected MP3s with the click of a stream ripper "record" button. At Pandora, every one of their millions of user-created playlists can be copied and deaggregated by stream rippers. The resulting files from these examples are being transferred to an iPod or any other MP3 player royalty-free.
Here's the bad news: For every 10 million stream rippers in use, and for each user that rips only two songs per week, over $1 billion in potential download revenues are lost to America because webcasters like Clear Channel, Yahoo and Napster have failed to provide adequate protection for their copyrighted content, instead using vulnerable media solutions created by Adobe, Microsoft, Real Networks and Apple.
The MRT X1 Recording Control solution has been tested by the RIAA and IFPI at www.BlueBeat.com and Mark Twain's MySpace profile. It has been proven effective against stream ripping, and is designed for rapid deployment on a Reasonable and Non-Discriminatory (RAND) basis.
Recently, Secretary of Commerce Carlos Gutierrez and renowned UCLA Professor Richard Walter publicly discussed the catastrophic effect stream ripping has on America's Gross National Product and the balance of trade, especially in China. The MRT solution protects these precious assets while limiting the copyright infringement liability of users, digital service providers and academic institutions.
The message is simple: If webcasting royalty rates are to be equalized with satellite or digital FM broadcasts by passage of The Internet Radio Equality Act, stream ripping protection provisions must be added to the bill before the CRB rates go into effect May 15, 2007. As Andy Warhol nicely put it: Making money is art and working is art and good business is the best art.
To all involved, please take a moment to reflect on Justice Souter's opinion, "We hold that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties." For without music, movies and art, computers would be nothing more than word processors.