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Attorney Kevin Grierson Says Web File-Sharing Is Here To Stay February 14, 2001 More chat transcripts ------------ Edward Lazarus - Medical Marijuana Edward Lazarus - Bush/Supreme Court Anthony Sebok - IBM/Holocaust Julie Hilden - KKK/Freedom of Speech Charles Compton - Microsoft John Dean - Rich Pardon Kevin Grierson - Napster Marci Hamilton - Napster Robert Precht - Embassy Bombings Yonah Alexander - Lockerbie Jonathan Nelson - Embassy Bombings John Dean - Bush Transition Victor Williams - Elections/Supreme Court Edward Lazarus - Elections/Supreme Court Michael Dorf - Elections/Recount John Dean - Elections/Watergate Catherine Christophillis - Drugs/Pregnancy Jennifer Granick - Drugs/Pregnancy Kevin Grierson - Napster Trial Ed Masry - Erin Brockovich Piere Thomas - Wen Ho Lee Lauren Gelman - Internet/Speech Anthony Sebok - Firestone Tires Neal Katyal - Clinton Sanford Levinson - Election Ruti Teitel - Ousted Leaders David Thibodeau - Waco Michael Dorf - Supreme Court Byron Sage - Waco David Linder - Scopes trial Marci Hamilton - Supreme Court Thomas Jurgensen - Human Genome Jeffrey Rosen - Privacy issues Solomon Wisenberg - Death penalty Ted Conover - Sing Sing prison Matthew Glavin - Clinton disbarment Anthony Sebok - Tobacco litigation Douglas Lichtman - Music copyright David Martin - Elian case

Kevin Grierson is an attorney with Willcox and Savage of Norfolk, Virginia, and specializes in intellectual property, mergers and acquisitions, corporate governance and new ventures. He is a member of the firm's Internet and E-Commerce Law Team. Grierson joined Law Chat on Wednesday, February 14, 2001, to discuss the February 12, 2001, decision by the 9th U.S. Court of Appeals that Napster must stop its users from exchanging copyrighted musical recordings. Law Chat is produced with FindLaw. Grierson did his own typing. The following is an edited transcript of the chat.

CNN Host: Welcome to CNN.com Law Chat, Kevin Grierson.

Kevin Grierson: Happy Valentine's day everybody.

CNN Host: If the recording industry succeeds in shutting down Napster or forcing it to become a subscription service, will the plaintiffs in this case go after similar services?

Kevin Grierson: They may try, but most similar services don't have a central server, so there's no individual to sue who holds the keys to the database.

Question from Chat Room: If the Justice Department prevails on its point that a computer is not a recording device as defined in the Home Audio Recording Act, is this removing the Fair Use Doctrine as a defense against copyright infringement litigation if I choose to back up my audio using MP3 files on a computer?

Kevin Grierson: Fair use is not dead. The Audio Home Recording Act never really contemplated songs on the computer. The conventional fair use analysis -- Is the use commercial? How many copies? How are they used? -- will still apply.

Question from Chat Room: There are so many work-arounds for Napster, I don't think they can really stop people from downloading songs illegally.

Kevin Grierson: You're exactly right. Napster-like services will continue to be a huge problem for the recording industry until they can offer a similar service at a price that people think is fair.

CNN Host: Napster has threatened to take its case all the way to Congress for copyright reform. Do you see copyright law revisions in the near future?

Kevin Grierson: I'm not sure how Congress will react. There is talk of allowing people to store MP3s of songs that they have purchased so that they can access them anywhere (like MP3.com), but it's unlikely that they would simply make a service like Napster allowable by law. More likely, they would come up with a compulsory licensing scheme that would force people to pay royalties when they buy recordable CDs.

Question from Chat Room: I think CD sales have risen BECAUSE of Napster. Why do the record companies not see that Napster helps people choose music, then go out and BUY it?

Kevin Grierson: A good point. However, sales have actually fallen around some campuses where Napster use is particularly heavy. The problem is that the version of the song available on Napster is so near CD-quality that for many people there's little incentive to go out and buy the real thing.

CNN Host: If the lower court issues an injunction acceptable to the appeals court, will Napster attempt to settle with the plaintiffs out of court, or will it try to accelerate the scheduling of a trial?

Kevin Grierson: I think that they'll pursue both avenues. Some people think that the recording industry will be more likely to deal now that they have set a precedent. I don't think much of Napster's chances on appeal, at least of the injunction ruling.

Question from Chat Room: Might the incentive to copy MP3s be reduced or eliminated if CDs were more affordable?

Kevin Grierson: Yes. I think that if MP3s could be purchased for a buck or two (or, say, $10 a month for unlimited downloads) that people would be less likely to try to get them for free.

Question from Chat Room: If the argument of the recording industry is that Napster is ignoring copyrights, why is it that those of us who purchased vinyl were not given CD versions of what we owned, seeing as how our purchase gave us the rights to the music? Shouldn't the recording industry people have replaced our old vinyl at the cost of producing the CD?

Kevin Grierson: You only get a limited license to use the music on the particular media that you purchased. For example, if you purchase a cassette and wear it out with constant use, you're not entitled to a new copy for free.

Question from Chat Room: Wouldn't it be easier to work with companies like Napster than against them?

Kevin Grierson: Some of the companies (Bertlesman, for example) are doing just that. Napster represents a fantastic opportunity for the record companies, since there are over 58 million downloads of the software so far. If all the record companies go off on their own, it will be much harder for users to find the music that they want. The industry just doesn't like the fact that Napster built its following off their intellectual property.

CNN Host: What is the next step in the Napster case, and what might the timing be?

Kevin Grierson: The appeals court ordered the trial court to modify its injunction so that the plaintiffs will give notice of specific songs that are being downloaded. There will likely be at least one hearing on that matter before the injunction is issued. That hearing could be in a few days, a week, or even longer. An injunction would probably be issued shortly after the hearing.

Question from Chat Room: If Napster goes to a subscriber only site and offers a portion of that to the music companies that are against them, will the music companies back off since they'll be getting some kind of profit from it?

Kevin Grierson: I doubt that Napster would include music in a pay service unless that music was already licensed, as that would make their case even harder to win. The record companies could then say, "Look, how they're profiting from our music too!"

CNN Host: Even if Napster keeps going, how does it plan to make a profit?

Kevin Grierson: Assuming that they can get enough of the record companies on board, they would be able to charge, say, $10 a month, from users and pass only a portion on to the record companies. If they even get only 20 percent of their users signing up, that's 10 million users paying $10 a month. That's a lot of cash.

Question from Chat Room: Isn't this the same old argument against blank media that came out of the 1980s, where they wanted to tax blank tapes? Why don't they just tax blank CDs?

Kevin Grierson: They actually do tax DATs [digital audio tape] now. You could tax blank CDs, but then what about [Diamond] Rio [MP3 player] and hard drives? There are new media coming out all of the time, and many of them (such as CDs) have lots of uses besides music.

Question from Chat Room: I don't see how the record companies can stop the new technology. What if a new company comes up with even better technology? What will happen then?

Kevin Grierson: I think it's inevitable that someone will come up with better technology. The recording companies will eventually have to offer a product at a low enough price that the chance of getting sued outweighs the benefits of a free download.

Question from Chat Room: Isn't it true that many artists WANT their music to be on Napster so they will get more exposure?

Kevin Grierson: That's true. But that's the artist's choice, and the point of groups like Metallica is that it should be their choice and not the choice of the people copying the music.

Question from Chat Room: The record companies may win now, but in the future what is the benefit of signing a record contract if you can distribute your music yourself over the net?

Kevin Grierson: Money. If you distribute your stuff and somebody can just copy it for free, how are you going to support yourself as an artist? The record companies will always have a place, because they have the facilities to make high-quality recordings, and the marketing muscle to promote acts so that they stand out from the masses of other musicians trying to make it big.

CNN Host: Do you have any final thoughts for us today?

Kevin Grierson: The genie is out of the bottle now, not only for music but for films and virtually any other artwork that can be digitized. Both producers and legislators are going to have to come to grips with the fact that file-sharing is here to stay.

CNN Host: Thank you for joining us today, Kevin Grierson.

Kevin Grierson: Goodbye, everybody.