Thad Davis Damian Forbes Jessica Salins Oscar Sandoval

Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval

Agenda 8 History 8 Additional Partnerships 8 Litigation & Ruling 8 Intellectual Property Rights 8 A House Divided 8 Issues & Strategies – Bertelsmann & Napster 8 Recommendations 8 Questions & Answers Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval

History 4 Founded in May 1999 by 19 year old Shawn Fanning. 4 Pioneered peer-to-peer file sharing creating one of the fastest growing and most frequently downloaded software applications in the history of the Internet. 4 Provides music enthusiasts with an easy-to-use, high quality network to freely exchange music files with other members of the Napster community. 4 Lawsuit filed in December 1999 by A&M Records later joined by Record Industry Association of America (RIAA) along with major music labels. 4 October 2000, Napster partnered with Bertelsmann AG to develop a membership-based service. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval

Additional Partnerships 4 Edel Music and TVT Records joined Bertelsmann. Napster alliance in January 2001. 4 June 2001, Napster partnered with Music. Net, a music download venture involving AOL Time Warner, Bertelsmann’s BMG, EMI, and Real. Networks. 4 Signed commercial distribution deal with AIM (Association of Independent Music) and IMPALA (Independent Music Companies Association), two European organizations representing 150 European independent record labels. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval

Litigation - Plaintiffs 4 Direct Infringement 8 Peers copying and distributing music files 4 Contributory Infringement 8 Napster facilitating the exchange 4 Vicarious Infringement 8 Any organization, corporation, or agency that allows the use of Napster’s services and the exchange of information through their networks (e. g. a university or office) Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval

Litigation - Defendant 4 Pencil Defense 8 Can be used to plagiarize, but has many other legal uses. 4 1984 Supreme Court Ruling, Betamax case 8 A new technology with substantial legitimate uses, and thus should not be shut down. 4 1992 Audio Home Recording Act 8 Allows people to transfer music online (applicable only to Digital Audio Tapes, not computers or the Web). 4 1998 Digital Millennium Copyright Act 8 As a “search engine” Napster has broad protection from copyright claims. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval

Ruling 4 August 2000: District Court preliminarily prohibits Napster from facilitating the exchange of plaintiffs’ copyrighted music without express written permission of owners. 4 February 2001: Court of Appeals rejects Napster’s appeal of District Court ruling, finding that Napster’s actions constitute copyright infringement. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval

Intellectual Property Rights 4 Many prominent examples of intellectual property rights issues. 8 AM & FM Radio 8 Audiocassettes 8 VCR/Betamax Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval

A House Divided 4 Copyright has always been a point of friction between content and consumer electronics companies. 8 Entertainment companies versus electronics manufacturers ¯Entertainment companies: hold persons liable for copyright infringement to protect their traditional distribution channels. ¯Electronics manufacturers: freedom to introduce new products without fear of lawsuits for abetting copyright infringement. 4 In the Internet age, these conflicts have come to the forefront because of the rapid pace of innovation. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval

A House Divided 1. Two Sony groups differ with each other with respect to Napster's file-swapping service. 1. Sony Music is a vociferous plaintiff in the lawsuit against Napster, while Sony Electronics is a member of a trade association that filed a friend of the court brief on Napster's behalf. 2. Refers back to Betamax case 1. Napster more of a service than a device - not protected by the Betamax precedent. 2. Electronics companies concerned this puts manufacturers at risk for lawsuits. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval

Broader Issues 4 Copyrighting and the problem of eliminating piracy 8 SAFE i. e. copyrights must be Secure, Affordable, in the right Format, and Easy to use. 4 Network effects - a community of 80 m users 4 Industry regulation Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval

Current Strategies 4 Partnerships and strategic alliances 8 Music. Net 8 Press. Play: Sony & Vivendi/Universal 4 Other Applications 8 Siemens Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval

Bertelsmann & Napster 4 Bertelsmann is the world-wide leading Internet provider among media companies. 4 Withdrew lawsuit against Napster upon partnership. 4 Napster and Bertelsmann will seek support from others in the music industry to establish Napster as a widely accepted membership-based service and invite them to participate actively in this process. 4 Bertelsmann hopes to gain: 8 Huge customer base 8 Revenue generating service 8 Equity stake Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval

Recommendations 4 A Napster-like system as central hub 4 Ensure SAFE practices 4 New Pricing Systems 8 Subscription Models 8 Time-based Models 8 Volume Related Pricing 8 Value Pricing Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval

Recommendations If you can’t bill it, kill it!!! xxxxxxxxxxxxxxxxxxxxx If the glove doesn’t fit you must acquit. xxxxxxxxxxxxxxxxxxxxxxx Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval

Questions? Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval

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