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52 J. Copyright Soc'y U.S.A. 239 (2004-2005)
Peer-to-Peer Networking and Digital Rights Management: How Market Tools Can Solve Copyright Problems

handle is hein.journals/jocoso52 and id is 276 raw text is: PEER-TO-PEER NETWORKING AND DIGITAL RIGHTS MANAGEMENT: HOW MARKET TOOLS CAN SOLVE COPYRIGHT PROBLEMS by MICHAEL A. EINHORNt and BILL ROSENBLATr* EXECUTIVE SUMMARY The term peer to peer (P2P) refers generally to software that en- ables a computer to locate a content file on another networked device and copy the encoded data to its own hard drive. P2P technology often attracts users who use it to reproduce or distribute copyrighted music and movies without authorization of rights owners. For this reason, the short history of P2P technology has been one of constant controversy and calls by many in the content industry to regulate or even ban P2P-based networks or software. As a general preventive measure against copyright infringements through digital technologies including P2P, copyright owners often use digital rights management (DRM) techniques to encrypt content or other- wise restrict access. Depending on the access or compensation arrange- ment, content owners may differentiate prices and limit use by the number of plays, duration of access, temporary or partial uses, lending rights, and the number of devices on which the file may be accessed. In this regard, the potential level of use control may go beyond the expectations of con- sumers accustomed to a broader range of uses enabled by analog technol- ogy. Consequently. many advocates now contend that DRM is harmful to consumers because it tilts the balance of control in favor of copyright hold- ers. For their part, rights owners respond that DRM merely offsets grave dangers otherwise made possible by digitization and Internet distribution. This study argues that the basic functionalities of DRM and P2P can be quite complementary and that innovative market mechanisms are cur- tB.A., Dartmouth College; Ph.D. (economics), Yale University. Michael A. Ein- horn is a testifying economist, the author of Media, Technology, and Copyright: Integrating Law and Economics (Edward Elgar Publishers, 2004), advisor to an international consulting firm, and Adjunct Professor of Law at Rutgers University. Michael Einhorn can be reached at (973) 618-1212, mae@mediatechcopy.com. *B.S.E. (electrical engineering and computer science), University of Massachu- setts. Bill Rosenblatt is president of GiantSteps Media Technology Strategies (www.giantstepsmts.com), Managing Editor of the newsletter DRM Watch (www. drmwatch.com), and author of the book Digital Rights Management: Business and Technology (John Wiley & Sons, 2001). Bill Rosenblatt can be reached at (212) 956-1045, billr@giantstepsmts.com. This article is a forthcoming White Paper at the Cato Institute. Peer-to-Peer Networkinp, 239

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