MUSIC PIRACY AND THE AUDIO HOME RECORDING ACT
In spite of the guidance provided by the Audio Home Recording Act
1
(AHRA) of 1992, music companies are once again at odds with consumer
electronics manufacturers. This time around, the dispute is over certain
information technology products that enable consumers to copy digital
music and transfer them to different formats, or exchange them over the
Internet. This article will discuss anti-piracy measures being taken by
digital content owners and the United States legislature to combat piracy
and evaluate them in light of the AHRA.
The Promulgation of Music Piracy
Over the last two years, the music industry has fed the media stark statistics about
“piracy,” the act of copying digital music content to a blank CD, or uploading or downloading it
on the Internet. According to various newspaper articles, an estimated 3.6 billion songs are
illegally downloaded each month in the United States.
2
In 1999, the music industry estimated
that one in four compact discs of new music was actually an unauthorized copy.
3
By the end of
2001, it was estimated that as many CDs were burned and copied as were bought.
4
In Europe,
blank CDs are outselling recorded CDs (although these blank CDs might have also been
purchased for legitimate reasons, such as to back-up personal computer files).
5
And since 1999,
ownership of CD burners has nearly tripled.
6
This trend of consumers sharing their music rather
than purchasing it may be attributable to many factors, including the slow economy. However,
the music industry seems to believe that the most likely culprit in this trend is the rise of digital
music,
7
i.e., free online file sharing, and the growing popularity of CD burners.
8
In an act of self-defense, the largest record companies are developing anti-piracy
technology to protect their copyrighted music against the information technology industry’s
1
17 U.S.C. § 1001-10 (1992).
2
Jacob Heilbrunn, Editorial, Hollywood Embraces Big-Brother Tactics, LOS ANGELES TIMES,
March 31, 2002, at M3.
3
Charles Arthur, Network: The Lady’s Not For Burning, THE INDEPENDENT (London),
November 26, 2001, at 9.
4
Id.
5
Jonathan Takiff, The Music Business Is Tired Of Being (CD) Burned, PHILADELPHIA DAILY
NEWS, August 15, 2001.
6
Steve Morse, Burned?, THE BOSTON GLOBE, April 21, 2001, at L8.
7
Instead of being recorded as a sound wave, digital music is recorded as a group of ones and
zeroes, and is playable on almost any digital media device.
movement toward increasingly user-friendly digital hardware and software. The United States
Congress also has an eye on this power struggle between digital music owners and IT electronics
manufacturers. It is currently considering a bill that would require IT manufacturers to protect
copyrighted digital music from piracy by making significant alterations to the CD players and
personal computers that they produce, thereby preventing unauthorized copying. However, there
is already a federal statute in place that permits and regulates the home recording of copyrighted
music. This current law provides a solid foundation upon which to build an up-to-date legislative
solution that will satisfy all parties involved without unduly burdening one industry in favor of
another.
Major Music Labels Develop Anti-Piracy Technology
A few of the “Big Five” major music labels
9
are currently experimenting with anti-piracy
technologies designed to combat the on-line file sharing of their products through peer-to-peer
networks. Both Sony and BMG have already implemented copy-protection systems, and Vivendi
Universal announced last spring its intention to add restricted-use technology to all of its releases
by the summer of 2002.
10
These copy-protection programs encode electronic impediments onto
commercial CDs, which prevent the discs from being played on any device that is not a simple
CD player.
Sony has developed its own anti-piracy technology, called “key2audio.”
11
The music
label announced in January 2002 that it had produced a total of 10 million discs
12
for 500
different albums that could not be played on personal computers by using its key2audio program,
which prevents consumers from listening to CDs on any type of CD-ROM or DVD player. A
second version of the software, key2audio4PC, is a bit more lenient than key2audio in that it does
permit listeners to play copy-protected CDs on their personal computer. However, the discs are
8
Jonathan Takiff, The Music Business Is Tired Of Being (CD) Burned, PHILADELPHIA DAILY
NEWS, August 15, 2001.
9
The Big Five major music labels are Bertelsmann’s BMG (BMG Entertainment), Vivendi
Universal, Sony, EMI Group, and AOL Time Warner.
10
Doug Bedell, Dysfunctional Discs; ‘Copy-Protected’ CDs May Not Perform As You Expect,
T
HE DALLAS MORNING NEWS, February 21, 2002, at 3D. See also, Charles Arthur, Network: The
Lady’s Not For Burning, T
HE INDEPENDENT (London), November 26, 2001, at 9.
11
Key2audio was developed by the Digital Audio Disc Corp. (DADC), which is a subsidiary of
Sony. Circumvention Claimed For Copy-Proof CD, C
ONSUMER ELECTRONICS, August 20, 2001.
12
Sony Says Its CD Copy-Protection Is On 10 Million Discs, AUDIO WEEK, January 28, 2002.
These discs were reportedly released in Europe by several different record labels. Doug Bedell,
Dysfunctional Discs; ‘Copy-Protected’ CDs May Not Perform As You Expect, T
HE DALLAS
MORNING NEWS, February 21, 2002, at 3D.
encrypted to limit usage to a single PC.
13
For example, once the CD is played on the consumer’s
home computer, she would not be able to play the same CD on her DVD player in the next room,
or on her computer at the office. Downloaded music files may be copied from the PC hard drive
to a blank CD, but that CD would likewise be playable only in the specific PC on which the copy
was made from an authorized download.
14
Another music label is licensing anti-piracy technology from outside developers. BMG
Entertainment began using the Cactus Data Shield anti-piracy program,
15
developed by Midbar
Technology,
16
on CDs in the fall of 2001. Cactus is designed to prevent consumers from
reformatting songs into MP3 files and burning copies, or making them available on file-sharing
systems.
17
The software prevents listeners from playing the discs on CD-ROM drives, which
means that the music will not play on the Sony Playstation 2, a number of car stereos and DVD
players, or on PCs.
18
The Cactus patent application states that the resulting playback distortion on
an unauthorized copy would not only distort the sound, but would also be “potentially damaging”
to amplifiers and speakers.
19
The Cactus system also disables stand-alone CD burners.
20
Digital rights management companies are also developing and marketing solutions for
entertainment companies. Macrovision,
21
in collaboration with TTR Technologies, developed
multiple versions of an anti-piracy technology called SafeAudio, a 100% software-based, audio
copy protection technology for music CDs. SafeAudio Version 2 allows CDs to operate in CD
players and PC-based CD-ROMs, but spoils any copy made to the hard drive or a CD burner by
adding background noise to the playback sound.
22
SafeAudio Version 3 allows CDs to be played
in simple CD players, but not in a CD-ROM or copied onto a hard disk drive. Products like
13
Sony Says Its CD Copy-Protection Is On 10 Million Discs, AUDIO WEEK, January 28, 2002.
14
Id.
15
Jonathan Takiff, The Music Business Is Tired Of Being (CD) Burned, PHILADELPHIA DAILY
NEWS, August 15, 2001.
16
Macrovision, discussed infra note 21, acquired Midbar Technology and TTR Technologies in
November 2002. See Macrovision Buys Israeli Anti-Piracy Technology, G
LOBES ONLINE,
November 5, 2002, available at
http://www.globes.co.il
.
17
Charles Arthur, Network: The Lady’s Not For Burning, THE INDEPENDENT (London),
November 26, 2001, at 9.
18
Id.
19
Jonathan Takiff, The Music Business Is Tired Of Being (CD) Burned, PHILADELPHIA DAILY
NEWS, August 15, 2001.
20
Id.
21
Macrovision Corporation provides digital rights management technologies for the home video,
enterprise software and consumer interactive software markets. These technologies encompass
copy protection, electronic licensing and rights management, and encryption.
22
UMG Silent On CD Copy-Protection Details, AUDIO WEEK, October 1, 2001. See also,
Macrovision Bolsters CD Copy Protection, A
UDIO WEEK, October 15, 2001.
SafeAudio are proving to be a difficult sell to record labels in the United States, which are
concerned about negative consumer backlash.
23
Perhaps in response to this concern, Macrovision
recently released its SafeAuthenticate product, which permits CDs that are authenticated by the
product’s software to be a genuine pressing to be played from the computer’s CD-ROM drive or
copied onto the hard drive for playback through Microsoft’s Windows Media Player.
24
The Consumer Broadband and Digital Television Promotion Act
While music copyright owners are taking action to protect their content, the United States
Senate is considering controversial legislation that would require IT manufacturers to implement
safeguards against unauthorized copying of music. In March of 2002, Senator Ernest Hollings,
D-S.C., Senate Commerce Committee Chairman, introduced the Consumer Broadband and
Digital Television Promotion Act
25
(“CBDTPA”). This proposed legislation, which is heavily
supported by music industry lobbies such as the Recording Industry Association of America,
would require all new digital media devices to be encoded with security technology to prevent
unauthorized copying of copyrighted works.
26
The drafters of this bill cite a negative cycle in the market for digital content as being the
impetus for this legislation. They find that there is a lack of high-quality digital content available
for sale to the general public,
27
which leads many consumers to pirate digital music. This piracy
threat makes content owners reluctant to place their copyrighted material in the marketplace.
This accounts for the lack of content for sale, thus completing the cycle and creating a need for
legislated content security measures.
28
The drafters contend that such measures will create a
situation where copyright owners are comfortable placing more content in the marketplace,
thereby reducing the consumer’s need to make pirated copies.
23
Record labels in Europe and Asia, where consumer fair use is less protected, readily use
products such as SafeAudio and Cactus Data Shield to protect their products. Aram Sinnreich,
Rollout Of CDs With Anti-Piracy Safeguards Limited By Tech Glitches, Labels Fear,
B
ILLBOARD, October 28, 2002, at 38. See also, Dan Daley, Copy Protection Technology: Can
The Industry Secure Content Without Alienating Customers?, T
APE-DISC BUSINESS, September
1, 2002, at 22; James Bickers, Copy Protected CDs: Piracy Defense or Rip-Off?, USA T
ODAY,
June 25, 2002, at 2E.
24
Macrovision released SafeAuthenticate in October 2002. News brief, AUDIO WEEK, Audio
Notes section, October 28, 2002.
25
Consumer Broadband and Digital Television Promotion Act, S. 2048, 107th Congress. (2002).
The Consumer Broadband and Digital Television Promotion Act is co-sponsored by Sen. Ted
Stevens, R-Alaska, Sen. Daniel Inouye, D-Hawaii, Sen. John Breaux, D-La., Sen. Bill Nelson, D-
Fla., and Sen. Dianne Feinstein, D-Calif.
26
S. 2048, 107th Cong. § 3(d) (2002).
27
S. 2048, 107th Cong. § 2(1) (2002).
28
S. 2048, 107th Cong. § 2(2) (2002).
Many high-tech industry leaders and consumer advocacy groups have balked at this
proposed legislation. Members of the IT industry believe that the charge to make them
responsible for inhibiting unauthorized copying is an impossible task because it is not
technologically feasible to protect a digital work once it is in the public domain.
29
Consumer
groups such as DigitalConsumer.org
30
feel that the bill violates individuals’ rights to post-
purchase flexible use of copyrighted materials.
31
Media critics declare that as a cure, CBDTPA
would be far worse than the disease of digital content piracy.
32
They say that making it more
difficult to play a copy-protected CD on more than one digital media device would be only a
speed bump for pirates who might easily circumvent anti-piracy technology, but it could turn out
to be a roadblock for the average music buyer.
33
The Audio Home Recording Act
In 1992, Congress passed the Audio Home Recording Act
34
(“AHRA”), an amendment to
the federal copyright law. Under the AHRA, all digital recording devices must incorporate a
Serial Copy Management System (“SCMS”).
35
This system allows digital recorders to make a
first-generation copy of a digitally recorded work, but does not allow a second-generation copy to
be made from the first copy (users may still make as many first-generation copies as they want).
The AHRA also provides for a royalty tax
36
of up to $8 per new digital recording machine and 3
percent of the price of all digital audiotapes or discs.
37
This tax is paid by the manufacturers of
digital media devices and distributed to the copyright owners whose music is presumably being
copied.
38
In consideration of this tax, copyright owners agree to forever waive the right to claim
copyright infringement against consumers using audio recording devices in their homes.
39
This is
commensurate with the fair use exception to copyright law, which allows consumers to make
29
Cara Garretson, Copyright Protection Bill Draws Criticism, INFOWORLD DAILY NEWS, March
22, 2002, available at
http://idg.net/crd_idgsearch_835348.html.
30
DigitalConsumer.org is an organization founded by Joe Krouse set up to oppose the Consumer
Broadband and Digital Television Promotion Act. Krouse is also the founder of Excite.com.
31
Garretson, supra note 29.
32
Alex Salkever, Guard Copyrights, Don’t Jail Innovation, BUSINESS WEEK ONLINE, March 27,
2002, available at
http://www.businessweek.com/bwdaily/dnflash/mar2002/nf20020327_2364.htm
.
33
Id.
34
17 U.S.C. § 1001-10 (1992).
35
17 U.S.C. § 1002(a) (1992).
36
17 U.S.C. § 1003 (1992).
37
17 U.S.C. § 1004 (1992).
38
Id.
39
17 U.S.C. § 1008 (1992).
copies of copyrighted music for non-commercial purposes.
40
The SCMS and royalty
requirements apply only to digital audio recording devices.
41
Because computers are not digital
audio recording devices, they are not required to comply with Serial Copy Management System
requirement.
42
It is clear from the language of the AHRA, and subsequent judicial interpretations of the
statute, that Congress did not anticipate ten years ago that the SCMS would be inadequate to
contain the impending home digital recording explosion that was galvanized by the Internet.
However, the CBDTPA bill and the new anti-piracy technologies appear to be the music
industry’s effort at making an end run around the AHRA. Instead of passing this new legislation,
it would be more appropriate for Congress to amend the AHRA, which strikes an appropriate,
albeit outdated, balance between music distributors, electronics manufacturers and consumers.
Pirated music has become such a large issue that it undoubtedly warrants the attention
that it is receiving. However, with so many divergent interests involved, it is not feasible for all
of these groups to be left to work this issue out among themselves, which is what the CBDTPA
suggests. Congress must take charge to enact legislation that will fairly balance the interests of
all of these groups, and the CBDTPA legislation is too partial to the music industry to be the
proper avenue for such an undertaking. Rather, Congress should look back to the AHRA as a
starting point and further develop that statute to accommodate for the societal and technological
changes that have occurred in the last ten years. This new AHRA, in conjunction with the new
paid subscription based online music services being offered by the music labels, has great
potential to result in an amicable understanding among all parties involved.
One change that is absolutely necessary for the AHRA is to require PC hardware and
software manufactures to also pay a royalty tax and comply with the SCMS requirement.
Although the primary function of a PC is not to record copies of music, for all practical purposes,
PCs pose the biggest threat to copyright holders because they not only allow users to copy music
onto the hard drive for downloading onto a blank CD, but also permit consumers to share music
on the Internet.
An amended AHRA would cover all the bases for the music industry: they would
continue to recover from digital recording device manufacturers for music copied on CD burners,
which IT manufacturers likely would happily pay rather than install anti-piracy safeguards on
their products; they would now be compensated for music downloaded on home computers; and
40
17 U.S.C. § 1008 (1992).
41
Recording Indus. Ass’n v. Diamond Multimedia Sys., Inc., 180 F.3d 1072 (9th Cir. 1999).
42
Id.
they would autonomously be able to collect from individuals via the online subscription services,
a well that will probably not run dry as long as the subscription fees are less expensive than
purchasing the music in a store.
Conclusion
Sometimes progress may feel more like loss than gain
43
when a technology that an
industry has developed a significant portion of their products around becomes outdated. While
this may be a frustrating experience for those industries that are tangential to the technology, the
proper solution is not to hinder progress, but instead to adapt accordingly. Clearly, there is a
significant consumer demand for digital music, and music labels have a healthy supply of digital
content to release into the marketplace. By using anti-piracy software or inhibiting digital audio
recording devices, the music labels would achieve little more than to create a source of frustration
for consumers and retailers, and perhaps even create an underground market for accessible music
and recording devices. Instead, Congress and the music industry should look to what has already
proven to be a successful formula in the AHRA, and make the necessary changes in the
legislation to make it more effective in the 21
st
century
.
By: Tia Hall
43
Quotation by Mason Cooley (b. 1927), U.S. aphorist. City Aphorisms, Eleventh Selection,
New York (1993).
