KaZaA lobbyist responds to P2P critiques

Phil Corwin, KaZaA's chief Washington lobbyist, recently submitted this letter to the Senate Judiciary Committee, responding to a previous letter from Titan Media on the "dangers" of P2P networks.

February 24, 2004

Dear Senator:

I am writing on behalf of Sharman Networks Limited (SNL), the Sydney, Australia based distributor of the Kazaa Media Desktop (KMD) peer-to-peer (P2P) software application.

Over the past several weeks you and other members of the Judiciary Committee have received two letters from the IO Group, doing business as Titan Media. Titan Media is a San Francisco based producer and marketer of pornographic homosexual videos. In its correspondence Titan has made the following key allegations regarding KMD:

1.    Titan takes adequate steps to ensure that its legal adult material is not accessible to minors, but “”Kazaa refuses to protect children from pornography”.

2.    There is some quick, easy and effective technical means by which SNL could reconfigure the KMD software to include a “shun filter” able to identify and block the transmission of any media file containing any of Titan’s copyrighted pornography, as well as the tens of millions of other copyrighted media files available on the Internet.

These allegations are groundless and false. In addition, Titan’s allegation in its second letter that SNL had threatened to sue it “simply because” it had corresponded with members of the Judiciary Committee is also false.

Before proceeding to more detailed refutation of Titan’s false charges, we would remind you that Titan Media was, along with the Recording Industry Association of America (RIAA), an aggressive user of the Digital Millennium Copyright Act’s (DMCA) 512(h) subpoena process. This expedited process, which allows copyright holders to obtain Internet Service Provider (ISP) subscribers’ identities without review by a judge, was struck down on December 19, 2003 by a unanimous decision of the District of Columbia Court of Appeals in RIAA v. Verizon, as regards materials that are not stored on an ISP’s own servers. Copyright holders seeking the identity of individuals they believe to be infringing may still obtain them through the filing of a “John Doe” lawsuit that provides substantially greater due process protections to the accused.
 
Titan Media had a unique approach to utilizing its 512(h) lawsuits, as was described by your colleague Senator Sam Brownback in his October 7, 2003 Wall Street Journal opinion piece, “Who Will Police the Pirate-Hunters?”:

While this subpoena is defended as an anti-piracy tool by organizations such as the [RIAA], the overriding consequences are about privacy, not piracy. Already we have witnessed the efforts of a pornographer, Titan Media, to use this subpoena to identify Americans who it accuses of stealing its porn. Now this pornographer is offering a gracious amnesty program: Buy its products, or else it will use the DMCA subpoena to publicly identify you. Titan probably calls that intellectual-property protection. I call that blackmail.

Titan Does Not Effectively Prevent Children From Viewing Its Pornography 

Unlike SNL, which is in the business of providing general-purpose software, Titan is in the business of producing and marketing pornography. While a credit card is required to purchase pornography from Titan’s TitanMen.com website, that site stresses that use of a credit card is not required for age verification permitting one to view explicit samples of Titan’s wares. Before one can access samples of the content available at the TitanMen website, one encounters an age verification page where one is requested to “Register here for your FREE password to access TitanMen Hardcore Previews!” This page further advises “It’s FREE, It’s EASY, and it does NOT require a credit card!” It then claims, “We go above and beyond all government regulations to ensure that children are not exposed to our products.”

Despite this claim, we found it trivially easy to circumvent the VerifyME system used by TitanMen, which it describes as “an age and identity verification service that integrates a government-issued ID database check”. By simply inputting a valid Zip Code for a claimed US state of residence, a false name, a false date of birth over the age of majority, and a random nine digit number as the claimed driver’s license (Social Security) number, we were able to instantly pass muster with this so-called age verification system. Any minor with an e-mail address and a desire to view TitanMen’s content could do the same. While we did not proceed further after testing the age verification system, we did note that we would be eligible to view “free hardcore previews” and other pornographic content once we provided a valid e-mail address.

The ease with which we were able to circumvent Titan’s age verification procedure suggests that it might be worthwhile for Congress to make further inquiry into the effectiveness of the means by which commercial pornographers are claiming to prevent access by children to their products.

SNL Already Provides Parents With Highly Effective Child Protection Tools

SNL abhors the exposure of children to pornography and obscene content. However, the issue of pornography available on P2P networks must be kept in context. As the General Accounting Office (GAO) stated in a November 14, 2003 letter to Chairman Hatch, “The pornography available on peer-to-peer networks is not necessarily more dangerous than the pornography available on Web sites or through other electronic means of dissemination…pornography is also easily accessible through other electronic means, such as Web sites, and the risk of children’s inadvertent exposure to pornography exists on these other mediums as well”. In fact, a search for common adult terms using any of the popular Internet search engines will identify and provide access to millions of Websites hosting adult content, many of which permit the viewing of hardcore photos and videos based on nothing more than clicking on a button certifying that one is at least eighteen years of age.

As an example, a search using Google, the most popular search engine, for the term “gay hardcore”, generates in only 0.12 seconds a list of about 5,670,000 web pages that can be browsed by children, almost all exhibiting sexually explicit content to any child that chooses to follow one of the links provided by Google.

The KMD software application already incorporates the most comprehensive and effective adult content filter of any P2P application. A study of parental controls provided in popular P2P file sharing programs conducted in 2003 by staff of the House Committee on Government Reform found that Kazaa was the only application which provided options for keyword blocking, inappropriate content filtering, blocking all still and video images, and parental password protection.

The KMD filter is a “simple filter” and is based on a basic list of words commonly associated with adult and obscene content. The KMD adult content filter is set “on” as default. Parents and other users desiring a higher level of protection, such as blocking all images, can choose to password protect these settings so that they cannot be changed in their absence. Parental password protection for filter settings does not appear to be an option afforded by leading search engines such as Google. In addition, users can select their own terms to add to the filter if they wish (keyword blocking). In this regard, in a January 13, 2004 letter sent by SNL outside counsel Lawrence M. Hadley (“the Hadley letter”) to Mr. D. Gill Sperlein of the IO Group, SNL made the following offer to Titan Media: “If you believe that the KMD adult filter is ineffective to block (when activated) the particular “types” of pornography that your company promotes and distributes, please provide the additional metadata key words by which you identify your content to Sharman”.

Titan Media’s Proposed “Solution” Is Technically Infeasible

Contrary to Titan Media’s baseless allegations, neither SNL nor its U.S. business partner, Altnet, have the means and ability to track, monitor and report on almost every single file transferred through use of KMD software. SNL’s KMD application does not sample or monitor, and is not equipped to sample or monitor, files that users of its application exchange. SNL is unaware of any technology that would reliably enable the monitoring of files exchanged between individual users of software containing FastTrack communications protocols.

The factual issue of whether providers of self-distributing, decentralized P2P software can effectively monitor and control the exchange of files using their software has been litigated extensively. In 2003, both the U.S. District Court for the Central District of California (MGM v. Grokster) and the Netherlands Supreme Court ruled that such software providers cannot be found liable for secondary copyright infringement based upon findings of fact that such providers have no way to block infringing use while still facilitating non-infringing uses of the same technology.

Further, SNL is not aware of any software application that can scan files exchanged between users of the KMD application for hash marks that may be associated with copyrighted files, or prevent users from searching for and exchanging such files. The KMD application cannot be changed to prevent users from locating and downloading unauthorized copyrighted files while allowing legal downloading of authorized files. Even if a specific digital file could be “filtered” with a hash ID, a hash ID can be easily changed without altering the content of the file. Indeed, concepts of hash file filtering have been considered and rejected by experts in field as not being effective against the distribution of any type of digital file, including copyrighted pornography. SNL is certain that the changes to the KMD software architecture suggested by Titan Media would be wholly ineffective in halting the unauthorized distribution of its pornography.

Finally, Titan Media has deliberately misrepresented the capabilities of technology employed by Altnet. Altnet is the leading worldwide distributor of digital rights management (DRM) protected and licensed copyrighted content. Altnet’s patented top search technology does allow it to monitor such DRM wrapped files that it makes available or sells to Kazaa users, but this in no way translates to an ability to track, identify and block hundreds of millions of digital files created and exchanged directly by KMD users.

SNL Has Not Threatened to Sue Titan For Contacting the Judiciary Committee

In its second letter to Judiciary Committee members, Titan Media claims that SNL had threatened to sue it “solely because” it had corresponded with members of the Senate Judiciary Committee members. This allegation is demonstrably false.

SNL’s only communication with IO Group/Titan was via the Hadley letter. That letter responded to a notice and takedown letter in which Titan threatened legal action against SNL. The only reference to possible litigation in the Hadley letter follows SNL’s denial that it is legally responsible for the activities of KMD users, and recites the U.S. and foreign court decisions that have upheld that position. The letter then continues:

Sharman will continue to defend its right to distribute the KMD against any new claims and assert all appropriate legal rights. Please be advised that, in the face of these decisions, any charge against Sharman based upon allegations that users of its software are infringing copyrights will be met with all legal remedies at Sharman’s disposal, including (without limitation) actions for malicious prosecution.

The clear thrust of this warning is that SNL will defend itself fully against any legal claims that IO Group/Titan may make against it in future litigation brought against SNL – not that it will seek retribution against Titan for communicating with public officials.

The Hadley letter also indicated a willingness to cooperate with Titan to some extent. It advised Titan that if, through legal process, it could obtain the name and address of any individual who had used KMD to illegally download its copyrighted works, then SNL would notify such individuals that they were in violation of the KMD software’s Terms of Use.

Infringement Must Be Stopped at the Source

The consensus among technical experts is that infringement is best addressed at the source, because once digital copyrighted works have been reproduced without authorization and made available on the Internet there is very little that can effectively halt their further dissemination. It is for this reason that the Hadley letter advised Titan Media:

[W]e recommend that companies such as yours explore the enhanced copy protection technologies now available, as well as encrypting and licensing technologies, to ensure that your pornography is not so easily made available. Indeed, with your current technology, as soon as someone downloads your pornographic digital files (after verifying age) that person, based on your allegations of widespread distribution, has no effective technical restrictions against further distribution through any digital communications medium to children or otherwise.

In this context, SNL notes that the RIAA also continues to perpetrate the “urban myth” that there is some simple, effective, and easily implemented filtering technology that can identify and block all infringing music files transferred via P2P software, yet its members choose not to implement available anti-copying technology on new compact disc (CD) releases. Encryption technologies are available that can both block access to content and prevent unauthorized copying, and these can be used in combination with robust watermark technologies that can survive file compression to identify particular copyrighted works. RIAA members appear reluctant to implement such anti-copying technology on a widespread basis out of concern that CD purchasers would react quite negatively to such restrictions and limitations on their use of purchased CDs. Yet it is completely disingenuous for RIAA’s members to continue to make available physical product in a technological format that is more than twenty years old and lacks any anti-copying technology, and then to demand that legally blameless third parties implement mythical “filtering” technology.

Just as this first practical line of defense is neglected, there is also a second line of defense in terms of effective filtering technology that is likewise ignored by those who would cast aspersions against P2P technology. In a widely reported January 9, 2004 address at the Consumer Electronics Show, Hewlett-Packard CEO Carly Fiorina proclaimed that HP was “proud to take a stand against piracy” as it announced its licensing deal to distribute Apple iPod digital music players under the HP brand, and then went on to allege that providers of P2P technology had eroded consumers’ morals by making piracy simple and widespread.

Ms. Fiorina then proclaimed, “In the past we had Moore’s Law. Now we have Kazaa’s law, which states our sense of right and wrong doesn’t evolve as quickly as our technology.”

While SNL appreciates HP’s recognition of its P2P leadership, it would postulate in return that we now have “HP’s law” – “Do as we say, not as we do.” Because the fact is that computer hardware makers have done far more to make “piracy” simple and easy than P2P software providers, and that their furnishing of both hardware and software tools that facilitate infringement have done far more damage to music industry revenues.

Virtually every computer sold to consumers today comes bundled with software that enables consumers to “rip” the unprotected digital content on CDs to compressed file formats. If such software were not made available it would be far more difficult for consumers to share digital content by e-mail, instant messaging, P2P, or the other means available for Internet transmission. Indeed, virtually every unauthorized file transferred across the Internet is first created with such software and would not exist but for it.

Further, virtually every computer sold today includes a CD burner, which together with the aforementioned software allows consumers to make an infinite number of perfect, full audio format reproductions of unprotected CDs. The weight of independent studies of the market consequences of P2P file sharing is that such activity has a net promotional effect on CD sales. In contrast, when a consumer burns a perfect copy of a CD for a friend it has no promotional effect and quite probably has fully displaced a future sale of that CD.

We do not advocate that HP cease to include compression/duplication software or CD burners in its products. It surely knows that, absent a legal prohibition barring such capabilities on all computers, it would lose customers in droves to competitors who did not take such steps. HP also knows that such technology, just like P2P technology, is capable of both infringing and non-infringing uses. We simply observe that it is rather hypocritical for HP to attack Kazaa’s technology while turning a blind eye to its own very substantial role in abetting infringing activity that has caused demonstrable harm to the recording industry.

Finally, we note that HP recently announced that it garnered $2.5 billion in selling Linux-related products and services in 2003. We commend HP for helping promote the development of this open source operating system. But HP is surely aware that most DRM schemes are not supported under Linux, and that the only means by which legal purchasers of DRM protected content can use it on a Linux system is to circumvent the DRM by “cracking” its encryption. Further, Linux’s open source code makes it relatively easy to intercept and defeat any attempt to create a secure system that locks down content, in comparison to proprietary operating systems. The Judiciary Committee might wish to inquire how HP plans to reconcile its advocacy of and growing profits from Linux with its publicly stated commitment to build DRM into all its products.

Effective Filtering Technology Exists But Goes Unused 

While SNL knows of no effective filtering technology that can identify and block the transmission of unauthorized copyrighted content via decentralized P2P software, it is aware of at least one available technology that does effectively identify copyrighted musical works. The same ripping and burning software provided by HP and other computer hardware manufacturers also generally has the capability to almost instantaneously identify a CD as a particular copyrighted work. This is accomplished by accessing the compact disc database (CDDB) over the Internet. 

Here then is software that accomplishes exactly what the RIAA wants – it identifies its members’ copyrighted works and could be the basis of technological impediments to infringement. SNL is therefore mystified that the RIAA fails to demand, and that computer companies standing against piracy (such as HP) fail to include, any technological limitations on infringing activities based upon such identification. RIAA could demand, for example, that such software prevent a “ripped” file from being transmitted over the Internet, or limit the burning of duplicate CDs to a single “fair use” backup copy. Similarly, as Ms. Fiorina announced “Starting this year, HP will strive to build every one of our products to protect digital rights”, SNL will be watching to see if HP begins to limit the ways that consumers can use its products to make unlimited numbers of unauthorized copies of identifiable copyrighted works.

While SNL does not advocate crippling technology on the misguided assumption that most consumers are infringers, and does not believe that the issuance of copy-protected CDs and the implementation of anti-piracy measures within supplied computer software would prevent all infringement, such steps would be far more effective than attempting to block infringing works once they are freely available on the Internet. In any event, both RIAA’s members and companies like HP should first take the steps they are capable of to halt infringement at the source before accusing P2P software providers of abetting piracy.

To sum up, major record labels are continuing to “leave the barn door open” by failing to use available content protection and branding technologies on their copyrighted physical product. Major computer companies are providing consumers with the technological means by which to clone an infinite number of copies of those copyrighted works as well as to “burn down the barn” by separating digital files from physical media. These parties take no responsibility for their own major role in abetting copyright infringement, yet demand that others take on the impossible task of rounding up a nearly infinite number of unidentified media files from the limitless “open range” of cyberspace.

P2P Is Not Responsible For The Coming Failure Of Online Music Start-Ups

Before closing, in the spirit of the pre-emptive strike, SNL would like to make a few points regarding the current crop of licensed online music services. SNL strongly believes that creators and rights holders should receive fair compensation for their works. SNL has already demonstrated that providers of computer games, music, films, and other content can effectively and efficiently distribute such works for payment by tens of millions of P2P users worldwide while enjoying the same DRM protections provided by other distribution mechanisms. And SNL continues to believe that the broad licensing of copyrighted content for P2P distribution, rather than punitive litigation against consumers and unwarranted limitations on technology, provides the best means of addressing copyright holders’ concerns regarding unauthorized digital distribution.

However, with regard to the current crop of online music services licensed by RIAA members, it is clear that they face a number of fundamental limitations --

·      Their current business model is self-limiting. The standard 99 cents (or less) per downloaded music track is based on a physical piece goods model. It sells music as a product, and fails to utilize the Internet’s potential to market music as a “celestial jukebox” service. While many consumers will pay $400 for a digital music player with 10,000 song capacity, it is unlikely that many will pay $9,900 to fill that player to capacity. Indeed, while Apple has sold about 2 million iPod digital music players, its iTunes online store has only sold about 30 million songs – that is, iPod owners have, on average, purchased only 15 downloaded songs to store on hard drives capable of holding thousands. This leads to the conjecture that they fill up the remaining device capacity with songs “ripped” from their own CDs or those borrowed from friends, or with songs they have otherwise obtained on the Internet. In light of this,  SNL believes that the best path to future prosperity for rights holders and digital distributors may well be with the flat pricing model that places no or negligible limitations on service and has already proven so popular with customers of cable television, wireless telephony, Internet access, and, most recently, digital satellite radio.

·     Competing DRM format standards are sowing customer confusion. In an attempt to lock consumers into particular online services and/or digital music players, Apple, Microsoft, Real Networks, and Sony are all pushing incompatible DRM formats, and are apparently soon to be joined on the Wi-Fi front by such industry consortiums as the Content Reference Group and the Hudson Group. Consumers are rightly concerned that until the industry settles on a dominant format – such as VHS’ triumph over Beta in videocassettes – they run the risk of expending hundreds or thousands of dollars on digital music that will not play on their future hardware of choice. Further, the potential for DRM video standards to skew competition for that digital media has been recognized by the Department of Justice, which has reportedly launched an investigation of the Blu-ray group, one of several industry consortia working to develop a standard for high-definition DVDs. As electronics, computer, and movie companies work to develop their own proprietary standards in this video area, continued government oversight may well be required to assure that consumers receive the full benefits of such new technology.

·     No licensed online service yet offers the breadth of content that users of P2P software make available to one another, and none is likely to do so any time soon.

·     The pay per download marketplace is overcrowded with new entrants with “cookie cutter” business plans and cannot justify all of the capital investment being made in it. Apple CEO Steve Jobs, whose company offers the leading iTunes digital download service, has publicly stated that the service is breaking even at best and that Apple’s profits in this area flow primarily from iTunes’ driving sales of iPod digital music players. On January 24th, Forrester Research analyst Josh Bernhoff told an audience of music and technology executives gathered at the MidemNet conference in France that he saw a grim future for many of these services:

“By the end of 2004, half the businesses that started will be out of business. I haven’t seen this level of irrational exuberance since the height of the [dotcom] bubble.”

As SNL fully expects that Judiciary Committee members will begin to hear P2P being blamed for these predictable business failures by mid-year, we hope you will remember that the real causes are inadequate business models, DRM format wars, and overinvestment. SNL’s Altnet partner successfully “competes with free” every day, and it is confident that P2P-based licensed distribution can do so in the future if it is granted the content licenses to do so.

A fully competitive online content marketplace should allow consumers to choose between a variety of business models and distribution technologies. Committee members should not adopt the mistaken notion that there is a clear divide between “honest consumers” and “pirates”. In a January 22, 2004 interview on washingtonpost.com, Eric Garland, the CEO of P2P monitoring firm Big Champagne, made this key observation:

[M]ost iTunes users are also Kazaa users, because they are early adopters and online music fans. In other words, rather than thinking that there are two types of people, honest people and scofflaws, we believe that there are two types of people: those who have discovered online music (in all its forms)…and those who have not, yet.

Conclusion

SNL hopes that this letter answers any questions that may have been raised in your mind by Titan Media’s two letters to Judiciary Committee members. SNL remains committed to providing the best available technology so that parents can prevent the exposure of their children to adult content available through P2P file-sharing technology, and to developing P2P technology to its full commercial potential for facilitating licensed and compensated distribution of copyrighted content.

I am also pleased to advise you that U.S. District Judge Stephen Wilson recently ruled that SNL could pursue its copyright infringement claims against major record labels as part of its counterclaim in the MGM v. Grokster case. SNL claims that they used unauthorized and unlicensed versions of the KMD software in their efforts to monitor the activities of software users, and that they breached the KMD software license agreement in a variety of ways. SNL also has a pending antitrust counterclaim in the case, which has been placed on hold in contemplation of Appeals Court review of the District Court’s summary judgment dismissal of claims against other P2P defendants. 

I would be pleased to respond to any further questions you or your staff may have in regard to the matters raised by Titan Media or to P2P technology generally.

Sincerely,

Philip S. Corwin

Comments

[Cypherpunk]

Is the original Titan Media letter available? I just found summaries of it online such as at http://zdnet.com.com/2102-1104_2-5140753.html .

I think Kazaa is on thin ice claiming that they can't do filtering. The nature of their software gives them complete control over what users download. They already admit to doing some filtering. If Titan Media gave them hashes or some kind of fingerprint of their copyrighted files, Kazaa would have the technical capability to prevent those files from being exchanged by Kazaa users.

[Jason]

As I understand it, they filter for keywords but not hashing. Also, I'm not sure how they get around people zipping and/or encrypting files to avoid hashing. There's currently some debate over whether fingerprinting technology will be effective.