David Morley

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David Morley

COPYRIGHT REFORM PROCESS

SUBMISSIONS RECEIVED REGARDING THE CONSULTATION PAPERS


Documents received have been posted in the official language in which they were submitted. All are posted as received by the departments, however all address information has been removed.

Submission from David Morley received on September 15, 2001 via e-mail

Subject: comments on Digital Copyright Issues

Feedback on Consultation Papers

By David Morley

Introduction

To commence, I would like to congratulate the Government on providing a very thorough and balanced evaluation of the issues underlying reform of the Copyright Act to address the digital age. Furthermore, it is my opinion that the Government's provision of a framework for the evaluation of these issues and for its prudent use of a very conservative and slow approach to introducing change is essential in ensuring that all stakeholder concerns are considered, evaluated and incorporated into any amendments to the Copyright Act. The one criticism that I do have, however, is that the general public may not be aware of the existence of these discussion papers, and thus of the opportunity to comment on the Government's proposals to ultimately help shape the future direction of Copyright legislation - an area, as the Government rightly recognizes, that is of critical importance to every Canadian. I myself only learned of their existence on September 12, 2001 and thus had only four days to read, summarize, resear ch, contemplate and generate an intelligent and informed response. As a result, although I have concerns and feel that I could provide value to the ongoing discussion in relation to the Compulsory Retransmission Licence to the Internet, especially as it relates to sound recordings, I do not have time if I wish to meet the September 15, 2001 submission deadline and thus have focused my attention on the paper entitled "Digital Copyright Issues". I believe that documents of such critical importance to every Canadian should receive global coverage in the media to ensure or increase the likelihood that every Canadian will be aware of their existence.

Background & Qualifications of Respondent

My name is David Morley and I am currently thirty years of age. I am a Chartered Accountant and received my designation in May of 1998. I articled with the firm Price WaterhouseCoopers in Toronto, Ontario in the Audit Business Advisory Services Group for four years and serviced clients in a diverse range of industries including retail, music, publishing, software and the head offices of massive multi-national companies. After four years, I transitioned into the Management Consulting Services Group where I headed up an internal advisory and marketing group that attempted to address and resolve how Price WaterhouseCoopers would go to market in relation to the Internet and to discuss the numerous emerging issues including copyright, security and privacy. After five years I took a job as Controller at Pandell Technology Corporation a small software development company located in Calgary Alberta with an online store called Indiestore.com. Outside of work I have been actively involved in an independent music project called Hypoxia Beach (www.hypoxiabeach.com). It is in this capacity, and in my capacity as business developer for www.indiestore.com, that I have been closely involved in the emerging technologies for distributing copyrighted materials such as music. Our band, since its inception, has embraced the Internet as a medium for distributing its original works. As a result of this attitude, we have had in excess of 40,000 downloads of our music since making our album available on www.indiestore.com and are, in the process, creating a small and focused fan-base. In the absence of the Internet, or if technology such as the mp3 format and players that support that format, these downloads and listens would never have occurred since our band does not have the budget or resources to obtain distribution of a more 'mainstream nature'. Specifically, it is very difficult for an independent band to get a CD into record stores across Canada and, even if they could, it is questionable as to whether this would be worthwhile given that consumers rarely are willing to purchase music without first hearing it (i.e. exposure on the radio). It is also impossible for an independent music act to obtain such essential exposure on mainstream radio without the backing of a major label and their access to capital to pay intermediaries that ensure their music end up on the play lists of radio stations across Canada and the United States. These observations and experiences have, collectively, turned myself and our band into advocates of the use of the Internet as a means of obtaining exposure for unestablished bands and advocates of working to reduce or eliminate the barriers that reduce or impede the efficient flow of information, including music, artwork, and writing. Copyright legislation, in some regards, can be viewed as such a barrier to the efficient flow of information and, in some cases, can actually be viewed as a deterrent to the creation and dissemination of creative works! This does not mean that we believe that copyright does not have a purpose or function in our society, rather, we believe that the intent of copyright legislation has become disconnected from how it is being used in practice and that some of the tabled amendments and proposals will do more harm to society as a whole than preserving the status quo. Enough on our bias, I will now turn to the specific discussion paper Digital Copyright Issues.

Overriding Concern - Enforceability (response to section 1 question number 2)

There is a concern, as yet unmentioned by the government, that legislation in relation to the prevention of circumventing technological protection measures or granting a new making available right to performers and sound recording producers will be completely unenforceable. Peer-to-peer file sharing devices (i.e. Gnutella and Kazaa) and other communication devices (i.e. MS Messenger, IRC and ICQ) shift the onus of engaging in copyright infringing activities onto the individual consumer. As a result, attempting to prohibit such technologies becomes extremely difficult since the infringing transaction - the reproduction of a copyrighted work - will occur directly between two consenting parties rather than on a centralized server. Furthermore, such applications have a plethora of legitimate uses such as the sharing of authorized works (our band's music) and the sharing of works in the public realm.

This issue is even more pressing when one considers the rapidly increasing use of file swapping as a method of finding, distributing and listening to music. In August of 2001 file swapping over peer-to-peer applications approached 3 billion files - this is in excess of all files swapped over Napster since its inception. If the act of digital file swapping of copyrighted works is illegal and falls under the realm of the Copyright Act, I would like the government to consider the following questions:

1. How will it be distinguished which files being swapped are infringing on rights and which are not?

2. If the increasing trend of use of file sharing applications continues how will the rights holders enforce their rights with respect to copyright? I believe, further, that the proportion of Internet users that have infringed on a copyright - via file sharing or downloading from an Internet site - would approach 100%. I am not saying that this is morally right, but rather I am asserting that this is reality. The level of copyright infractions, with respect to the recording industry, that are going on are more likely to be an indicator of widespread consumer backlash than a problem with the existing copyright act.

The question raised herein is whether the current issue, with respect to the explosion of piracy on the Internet, is not a problem of copyright but, rather, a problem of business models in a digital environment. The Government itself, in its discussion paper, mentions the evolution of online content distribution and the need for different business models.

One potentially exciting avenue that receives very little attention and thus absolutely no research and development effort is the implementation of a micro-payment system that would support the concept of mass distribution and consumption of creative works (this would be interpreted as good for the creator and consumer) as opposed to the current model of limited distribution and consumption at a higher per consumption price point. It is reasonable to envision no loss in revenue, or even a possible increase in revenue, to rights stakeholders. Specifically, while the per unit price will decrease (as it must once the need for a tangible distribution medium has been removed) the overall level of consumption will increase leading to a possibility of increased revenues. This development would also assist independent bands such as ours that would have received some compensation for the distribution of their creative works.

The other interesting observation is that the Internet - to date a largely open, unrestricted and unlegislated realm - has created an explosion of creative works that is unprecedented in scope. This explosion takes the form of both infringing and non-infringing creative works. The Internet facilitated the explosion of independent music and cinematic productions would not have occurred, or would have occurred at a much slower pace, without 'circumventing' technologies such as Napster, Gnutella, the mp3 format, Music Match, etc. The Government states that its objective with respect to Copyright Legislation is, in part, to ensure a wealth and diversity of creative Canadian content. This writer asserts that the government has achieved this end by staying on a conservative course and not amending the copyright act. One would need go no further to verify that this is the case than checking sites like Maple Music, Indiestore.com and other independent distribution points.

Making Available Right

1. How would a making available right affect the balances among various copyright interests?

My main concern is respect of implementing both articles 10 and 14 of the WPPT given that extends, as far as I can understand, both performers and producers the making available right. Article 10 states "Performers shall enjoy the exclusive right of authorizing the making available to the public of their performances fixed in phonograms…" while article 14 states "Producers of phonograms shall enjoy the exclusive right of authorizing the making available to the public of their phonograms…". In this respondent's opinion, there is no difference between these two rights and the courts of Canada will be left to resolve who has the ascendant right - in other words whether the performer or the producer has the primary making available right. This problem arises when a physical medium is not required to distribute a recorded performance and thus the meaning of 'phonogram' becomes blurred. Questions for the Government to consider include whether phonogram means the individual pieces of content - each song which is a captured recording of the performance of a given performer, the grouping of content or 'album' or collective grouping and ordering of the songs on a phonogram, or the physical medium that such material is distributed on.

2. Other Concerns

This respondent believes that the distinction between 'streaming' and 'on-demand', as proposed by the Government, is moot at best. Streaming technology is another form of 'downloading' and thus can be considered 'on demand'. 'On demand' services can make use of streaming technologies to deliver their services. This distinction needlessly complicates the Copyright Act. The enforceability of a making available right is of extreme concern to this respondent given the existence and wide-spread adoption of peer-to-peer technologies such as Gnutella. The implementation of such a right may aid in eroding the public's support and interest in the overall Copyright Act.

Legal Protection of Technological Measures

1. Prohibition of Circumventing Technologies

This respondent is vehemently opposed to any prohibition of technology or devices that can be potentially viewed as copyright circumventing technology. Such technologies have been instrumental in the effective promotion and marketing of our band and include applications such as Napster, the mp3 format, Gnutella, the Rio, the CD-RW, the computer itself, etc. While all of these technologies can be used for activities that infringe on the copyrights of various stakeholders, this respondent believes that the benefits of such technologies far outweigh the adverse consequences. The imposition of legislation that blindly assumes all uses to be infringing is mean-spirited and counter-productive to the creative community. A specific example is Tariff 22 under review by the Federal Review Board. This levy on blank recording media to provide compensation in the form of royalties to creators and producers of musical content will do nothing to assist our band or many other independent bands in Canada and further a broad. Since royalties are distributed primarily based on sampling the playlists of mainstream radio (which are indirectly controlled by the recording industry) our band would see very little of the royalties collected yet would have paid an exhorbitant amount into the royalty pool given our use of CD-R burning technology to produce and sell our own albums and to create demo CDs.

2. Privacy Issues

This respondent believes that ALL technological protection schemes must take a back seat to privacy concerns. In other words, the privacy of the end user or consumer should be tantamount and should take precedence over all other interests. This is a definite concern in the coming century as privacy of individuals is rapidly eroded.

3. Further Discussion on Copyright in this Environment

This respondent believes an in-depth review of copyright legislation, as it currently exists, its intent and how it is being used in practice would be an extremely worthwhile exercise. Specific examples include determining whether it was the intent of the Copyright Act to remove ownership of a piece of music or creative work from the actual creator of the work (i.e. the performer or original song-writer) and transfer it to the company or person that captures a given performance (i.e. the recording company), whether distribution and creation of creative works would actually increase in the absence of restrictive and punitive legislation, and whether the current climate and piracy issues are more an issue of consumer backlash than anything else. This respondent believes that the protection of technological measures falls outside of the scope of the Copyright Act and should be addressed, if at all, in other forms of legislation. In other words, the Copyright Act gives my band the protection it currently requires to establish ownership in its creative works. This allows us to adequately resolve disputes with unauthorized distribution of our works. For our band, we will not be using the Copyright Act to pursue individual 'infractions' of our copyright, if they can be called that since we authorize the users of our music to distribute it as long as it is not-for-profit, but rather to pursue companies or individuals that are trying to profit from our copyright without our consent. We, as a band, currently have the choice of distributing our content using unprotected formats such as the mp3 format or protected formats such as Liquid Audio.

Legal Protection of Rights Management Systems

1. Protection of Rights Management Information

This respondent believes that the Copyright Act is sufficient in respect of rights management systems in that it clearly establishes ownership and rights to a given sound recording or creative work. It is not in the interest of an end user or consumer to remove rights management information, unless such information somehow decreases their utility or enjoyment of the creative work or impedes on their privacy, since this act will decrease the organization of their personal database of creative works. A specific example is the tag contained on an mp3 file - to remove this information would mean that categories such as artist, genre, mood, preference and album would be lost and the user's enjoyment of that music file would decrease. Protection and legal recourse should be extended to cases where the objective in removing such information is to falsely hold out a creative work as something else.

2. If Rights Management Information is protected then what should it protect?

Should rights management information be protected under the Copyright Act, this respondent prefers Option B where specific items are outlined including information identifying the work, the author, the first owner of copyright, and any codes that represent this information. Terms and conditions should be excluded as the Government rightly identifies protecting such information could be misleading if the terms and conditions are not legally binding in Canada. Furthermore, many consumers may fail to read the terms and conditions prior to using a piece of creative work - especially in the case of lengthy and wordy legal agreements. Penalties should not be cumulative for offences under this proposed section and under the technological circumvention section. Once again, consumer privacy issues should take precedence over any technological or rights management concerns.

Liability of Network Intermediaries, such as Internet Service Providers, in Relation to Copyright

1. Incorporation of Peer-to-Peer Technologies

The government should incorporate the existence, rise and use of peer-to-peer sharing technologies in any proposed amendments. This includes Tariff 22. The Government states, in its discussion paper, "…it is the content providers (i.e. those who upload content onto network sites) who are liable to pay royalties under the Act…" Thus, by similar reasoning, under a peer-to-peer regime it would be the individual users of the application that share portions of their music library that would become responsible for the payment of royalties. This would, in effect, create an unenforceable law. This is also a greater issue if one takes into account the fact that the intention of the user 'sharing' the file from his or her harddrive cannot be determined at the time of the infraction - e.g. a consumer mistakingly places a copyrighted song in their shared folder. It is this respondent's opinion that the proposed notice and take-down regime is useless as it specifically relates to notifying and taking down infringing 'sites'. Websites as a distribution platform make up a tiny fraction of the whole, in terms of distribution of creative works, when peer-to-peer applications are incorporated into the total. In other words, any amendments must address peer-to-peer applications or will end up providing no utility to any of the rights holders. The notice and take-down regime will be difficult to implement in the case of peer-to-peer technologies.

2. Alternative Systems

If research and development efforts were placed on abling technologies as opposed to 'crippling' technologies (technologies aimed at destroying consumer utility in the enjoyment of creative works) a solution may yet develop. This respondent envisions a technology such as a micropayment system that would allow consumers to easily and, possibly, transparently compensate creators of creative works for their enjoyment of same. In other words, much effort has been directed towards developing technological measures that will allow us to recreate the physical realm in the digital realm - e.g. the restrictions created by requiring a physical medium for distributing a creative work. This respondent believes that such technologies will do nothing but create false barriers to the full enjoyment of those creative works by the end consumer. Such barriers will create greater incentive to hackers and pirates to break them. Effort should be redirected at developing business models, technology and transaction processing that supports the reality of the digital realm that infinite copies of a sound recording are possible as soon as one copy has been released to the consuming public. Such research could be directed towards a micropayment system that would provide a revenue source to independent bands such as Hypoxia Beach that will support and further the ongoing explosion of creative content from independent sources. Such research would also support the underlying economics - when a good or service is scarce it enjoys an exchange in value - a price. When a good is unlimited in supply it has, by definition, no value. This is the case with musical and other digitized creative works. Under the new regime there is an opportunity for creators of content to earn a living if a micropayment system were instituted or developed that lowered the per cost consumption such that there would be no value in circumventing such a system. Further value could be provided by record labels and other aggregators of content by providing guaranteed sound quality, ensuring all files are properly tagged and providing content ancillary to the creative work such as information about the creator. It also recognizes the reality of the creative process - that each and every citizen in Canada is, in fact, a creator of creative works and content - it is just that some efforts are better, on a subjective or professional level, and some are better marketed. Thus, every citizen in Canada would have the potential to earn a return from their creative works and those that are truly revolutionary or talented will receive the greatest return. Such a system would indeed meet each and everyone of the Government's policy objectives with respect to the Internet. Of course this is an EXTREMELY complicated and sophisticated proposition and would require the participation and investment of major established players and stakeholders.

3. ISP Liability

I do support the limitation of ISPs' liability in relation to the content that circulates over their servers and prefer the notion of self-regulation due to many arguments proposed by the Government in their discussion paper

Conclusion

I have run out of time to comment further on the Government's discussion papers. I would appreciate the opportunity, if the government values this submission, to further refine this submission since it is a rushed effort and would also appreciate a further opportunity to provide feedback on the Retransmission licence. In respect of the latter, I think any geographic restriction goes against the government's objective to increase distribution of Canadian creative works. In other words, by imposing a geographic boundary we will, in effect, be limiting or reducing the potential distribution.

David Morley, CA
(Address removed)


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