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Charges of greed

Hearing probes RIAA's fight against piracy

WASHINGTON — There was one common denominator at Tuesday’s colorful piracy vs. privacy Senate hearing: the accusation that corporate greed is the real culprit and everyone else is a victim of the money chase.

Sen. Norm Coleman (R-Minn.) called the hearing to investigate the Recording Industry Assn. of America’s recent tough-love legal approach to fighting the online piracy currently raging on peer-to-peer file-sharing networks such as Kazaa, Morpheus and Grokster.

Coleman was alarmed this summer when, for at least a couple of weeks, a D.C. clerk’s office became a virtual subpoena clearinghouse for the RIAA, processing more than 1,000 subpoenas against individuals across the country accused of “egregious” music downloading and distribution on the Internet.

In the intervening weeks, the RIAA has settled 64 suits (all for sums of $3,000 or less), including one against the mother of an 11-year-old girl, and dropped another against a 66-year-old grandmother who the industry trade group accused of downloading hundreds of songs from rap artists.

At the hearing, LL Cool J repeatedly asked the panel if entertainers deserve to be compensated for their work. He was testifying on the same panel — and the same side of the argument — as RIAA chief exec Mitch Bainwol and Motion Picture Assn. of America topper Jack Valenti.

“I mean, we’re the dreamers, we don’t have the power that you have,” Mr. Cool J, as Coleman referred to him, told the senators.

Public Enemy front man Chuck D testified against the music industry establishment, speaking out in favor of the control an artist can have over his own music and promotions by embracing peer-to-peer technology to distribute songs.

‘Power to the people’

“As an artist, I never felt like my copyrights were being protected in the first place…,” he bellowed. “The record industry is so hypocritical. That’s why I call P2P (file-sharing sites) power to the people.”

He later charged the music biz with having a “neoplantationistic attitude” towards rap artists.

But the most compelling testimony of the day came from Lorraine Sullivan, a recent college student struggling to make a living and pay tuition with student loans. Sullivan came home Sept. 9 to four messages from reporters wanting an interview about her response to the RIAA lawsuit. Until then, she didn’t even know she was being sued.

Sullivan called the RIAA, which got her in touch with one of their lawyers. Sullivan then started crying because she was told she would have to cough up at least $3,500 to make the lawyers go away.

“I cried at this point and told (the lawyer) that all I had was $1,500 in my savings account. I explained that I was a full-time student with a part-time job that usually paid less than $150 per week,” Sullivan said. “She asked if I could ask my parents for money, to which I replied no. She asked me if there was anyone else I could get to help me, and I said no. She asked if I had any credit cards, and I told her that although I did, they were pretty close to their limits but I could inquire about a cash advance.”

Sullivan eventually paid the RIAA $2,100 and still owes $400 more.

Bainwol’s debut

In his first public appearance since joining the RIAA as its top exec just weeks ago, Mitch Bainwol tried to explain that the trade group does not like to sue its fans and is only doing so as a last resort in order to try to shut down the file-sharing companies.

These companies are making money hand over fist, he said, and destroying the music biz in the process by offering music free and incurring no upfront costs to produce the creative product and distribute it.

“Online piracy is not only illegal, but robs songwriters and recording artists of their livelihoods, stifles the careers of up-and-coming musicians and threatens the jobs of tens of thousands of less celebrated people in the music industry,” he said.

P2P sites fight back

On the other side of the debate, the file-swapping sites blamed the powerful music and movie trade groups for stifling individual creativity and technological ingenuity in their heavy-handed anti-piracy campaign.

Alan Morris, exec veep of Sharman Networks, the parent company of Kazaa, said the entertainment industry’s efforts to shut down file-swapping sites reminds him of how Valenti fought video rental technology 20 years ago, arguing that it would strangle the movie biz when, in time, the opposite turned out to be true.

“The RIAA and the MPAA have always sought to control, and maybe this time they are really concerned they can’t control this technology,” Morris said. “Does anyone think that P2P is going to go away?”

Solon’s stinging questions

But the more difficult issues about how to negotiate some sort of compromise between the two sides and the tech limits involved were broached only when Sen. Carl Levin (D-Mich.) starting asking tough questions.

Levin took the file-swapping sites to task for failing to live up to their own end-user agreements by cracking down on individuals who swap copyrighted material without permission on Kazaa.

“These are ‘honor’ agreements,” Morris explained.

“Which means they aren’t worth the paper they’re written on,” Levin retorted.

Levin also grilled Morris about why his company was incorporated in Vanuatu, an island in the South Pacific well known as a tax haven and popular location for offshore shell banks.

Morris responded that the company incorporated in Vanuatu for tax-savings reasons, “for the same reason U.S. companies are incorporated in Delaware,” he said just before the lobbyists, reporters and staffers gathered in the hearing room erupted in laughter at the comparison.

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