IRIS Plus 2000-4: MP3: Fair or Unfair Use?

Author: Susanne Nikoltchev & Francisco Javier Cabrera Blázquez, European Audiovisual Observatory

Published: 01/08/2000

"For the holder of the copyright, cyberspace appears to be the worst of both worlds – a place where the ability to copy could not be better, and where the protection of law could not be worse." These words summarize the deepest fears of copyright holders with regard to new technological developments – fears that are nurtured by a compression technology called MP3 and the various ways of using it via the Internet.

What is MP3, and why does it pose a threat to traditional copyright models? Roughly described, MP3 is an audio compression file format designed to facilitate downloading and storage of digitised sound recordings, significantly reducing the volume of information while retaining near-CD quality sound. MP3 is not the only compression format available for music files, but it has become the de facto standard on the cyberspace. Users can create MP3 files from CDs using softwares available for free on the Internet, and they can listen to them directly from their computers, portable MP3 players (similar to portable CD players), or MP3 car players. They can also send their MP3 files to friends as e-mail attachments or even offer them via web sites or through file-sharing groups.

Whereas the characteristics appear to be fully beneficial to consumers, MP3 technology poses a real threat to the recording industry. Due to the ease of transmission and to the fact that each further MP3 copy is identical to the original, illegal distribution of copies of protected works has become too easy and  also too inexpensive. A MP3 sharing movement has flourished, which includes a culture of indulgence towards piracy.

So far MP3 is changing the world of audio works, in particular the market for CDs. Yet the principal technology is equal to that for digital versions of movies and most likely it is only a question of months until the capacity of Internet connections and further developed software allows movies to be transported as easily as is already the case for sound files today. As a consequence, the filesharing phenomenon may soon revolutionize the audiovisual sector as a whole.

The MP3 technology itself has been greeted as a positive development that will benefit the consumer and the author/composer. In particular, representatives of the music industry declared that they would not block the exploitation of the new technology as long as the uses sufficiently respect authors' and all derivative rights. The main challenge, however, is to determine in practice the threshold for sufficiently respecting copyrights. This task is particularly difficult in light of international treaties and domestic laws that allow the duplication of copyrighted audio, visual, or audiovisual works for private use, or "fair use" in the terminology of the United States Copyright Act.

The WIPO Digital Treaties leave to the contracting parties the possibility of restricting exclusive rights (including a reproduction right) to certain special cases that do not conflict with the normal exploitation of the work, performance or phonogram and do not unreasonably prejudice the legitimate interests of the author, performer or phonogram producer. This leaves the door open to contracting States to permit the digital private copying of works. The amended proposal for an EC Directive on Copyright and Related Rights in the Information Society, which is expected to be adopted at the end of 2000 or the beginning of 2001, will also allow EU Member States to impose limitations on the exclusive right of reproduction for audio, visual, or audio-visual digital recording media made by a natural person for private and strictly personal use.

Not surprisingly, the application of private use exceptions has become one focal point of recent case law on the legality of MP3 copying and/or distribution schemes. Courts have been required to draw the bright line between legal private use, on the one hand, and illicit commercial copying schemes set up to look like private use, on the other hand. In addition, they have had to review other domestic  law exceptions such as public performance rights and the limited liability of Internet service providers. Public discussion has increased since the  development of more sophisticated systems for sharing and exchanging MP3 files, some of which have led to the distribution of copyright works on a large  scale.