[Ecommerce] Intellectual Property Use Fee (IPUF) Proposal

[Manon Ress]

http://www.nypost.com/technology/47329.htm

SMART IDEA FOR E-MUSIC SWAPPING 
 
By BEN SILVERMAN 

May 7, 2002 -- DotcomScoop.com 

CRYING foul won't benefit the music industry much longer. 

Sooner or later a viable solution to the problem of online
music-swapping will have to be enacted. The King of the Peer-To-Peer
Space thinks it has such a solution. 

Sharman Networks, the Australian company that operates the wildly
popular KaZaA file-sharing service, is pushing a proposal that would
affect the entire technology sector and finally pay out royalties for
digital music transfers. Thus far reaction to the proposal has been
mixed. 

"What Sharman Networks appears to be proposing is a compulsory license
and we would be opposed to that. We believe this is something the market
should decide," a spokesperson for the Recording Industry Association of
America told The Post. 

Sharman's idea is an Intellectual Property Use Fee (IPUF). It amounts to
a compulsory license exacted on the entire supply chain of digital music
from computer makers to Internet service providers to device makers. 

"I am absolutely confident that even a low-level of royalty [from the
IPUF] would produce in its first year a minimum of $1 billion in direct
payments to artists," Philip Corwin, a partner at Washington, D.C. law
firm Butera & Andrews and the lead lobbyist for Sharman Networks told
The Post. 

"When can the record labels produce the first billion in revenue for
artists?" 

The IPUF, Corwin says, is getting keen interest from artists and the
tech community. Sharman hopes that it can successfully lobby for an
in-depth study into the viability of the IPUF. 

Tech companies meanwhile are quickly finding themselves caught in the
crossfire between the entertainment industry and file-sharing companies
thanks to a bill introduced by Senate Commerce Chairman Fritz Hollings
(Dem - S.C.) that would set federally mandated copyright protection
standards. 

Tech firms say the bill would limit innovation. Capitol Hill insiders
say the bill doesn't have enough support to pass and Hollings has
already moved onto a new project; an Internet privacy bill. 

Representatives from numerous tech companies refused to comment on the
IPUF proposal. 

But speaking on the condition of anonymity, an executive at one of the
world's largest computer makers said that Sharman's proposal might be an
apt middleground. 

"We're being dragged into a situation that we have nothing to do with,"
the executive told The Post. 

"But it's become clear that we're going to have to take some sort of
responsibility for enabling the distribution of copyrighted material. If
that's the case, something like the IPUF is attractive compared to what
Hollings is proposing." 

Corwin, who previously lobbied on behalf of MP3.com, says that the IPUF
makes sense because so many people are reaping the rewards of online
music distribution, except the artists themselves. And Corwin says that
compensating the artists is Sharman's main concern. 

"A lot of different parties; computer manufacturers, software providers,
telecom and broadband companies, and providers of peer-to-peer services
are benefiting from widespread availabilty of digital music." 

"Basically the entire legacy of content from the music business is
unprotected and everyone is making a buck except the people who created
it." 




-- 
Manon Anne Ress
Essential Information
www.essential.org
PO Box 19405, Washington, DC 20036
mress@essential.org, voice: 1.202.387.8030, fax: 1.202.234.5176