Kazaa to compensate copyright holders

Nikki Hemming, CEO of Sharman Networks, has announced her company will be seeking approval of a compensation method for copyright holders. Called the ‘Intellectual Property User Fee’, the method would allow copyright holders in the music industry to

Nikki Hemming, CEO of Sharman Networks, has announced her company will be seeking approval of a compensation method for copyright holders. Called the 'Intellectual Property User Fee', the method would allow copyright holders in the music industry to be compensated for exchange of their work via the Kazaa P2P file sharing application.

According to this report, IPUF would mean 'the company (Sharman Networks) and others, including Internet Service Providers and hardware manufacturers' paying the music industry a fee not only to compensate it for works already being distributed, but to also gain rights for distribution of new content.

Details on IPUF are sketchy, however Ms Hemming's proposal, as it stands, seems doomed to failure. Dealing with the music industry means dealing with the major US record labels and the Recording Industry Association of America. To date, no file sharing company has managed to proffer a deal that allowed them to both continue normal operations while adequately satisfying all interested parties.

Also worrying is Ms Hemming's comment regarding imposing fees on 'Internet Service Providers and hardware manufacturers.' ISPs have long held that they are merely conduits for customer's data and therefore not responsible for the data itself – in much the same way Australia Post is not responsible for the content of parcels it delivers. There is also the problem of exactly how you would impose the fee on an ISP. The most viable method would seem to encompass blocking all access to the Kazaa network, then allowing access via the IP ranges of each ISP agreeing to pay. However, the one fundamental flaw in this proposal is that ISPs don't really want their users sucking down Gigs of data. The more data each user transfers, the less money an ISP makes. Thus an ISP based subscription service would actually help ISP's stop Kazaa use on their networks, saving them massive amounts in data transfer costs.

Charging hardware manufactures a fee is also problematic. If IPUF chose to target all devices capable of playing digital music, the fee would have to be imposed on retail computer systems. You then run into the problem of imposing said fee on users who put their own systems together instead of buying a finished product from a company such as Dell. One likely solution would be to blithely impose the fee on all computer hardware. Unfortunately, both methods fail to recognise that PC's are more than just fancy stereo systems for digital music. You cannot impose a universal fee to compensate copyright holders for pirated content, when not all users actually participate in said pirating.

Of course, IPUF could choose to target only those devices dedicated to digital music playback – such as MP3 players. However, it's almost certain that the majority of MP3 player manufactures would balk at paying for something they gain no benefit out of. Which brings us to the law option.


While major record labels and the RIAA may see laws as a savior, the cold hard truth is that any attempt to pass IPUF or its equivalents into law would result in widespread dissent from users, on the same scale as recent reactions to the proposed CBDTPA law in the US. People don't like to be told how they can use their equipment, nor do they like paying fees for products or services they don't use. Any IPUF or IPUF-like law would do precisely that.

Ultimately, the only way anyone is going to turn digital distribution of content into a viable business is by offering users a better product or a better service than is currently available. Until this happens, people will continue to use the 'free' alternatives to subscription based download networks such as Napster and, it seems, Kazaa.

--Brad Webb