[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
REDUCING PEER-TO-PEER (P2P) PIRACY ON UNIVERSITY CAMPUSES: A PROGRESS
UPDATE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COURTS, THE INTERNET,
AND INTELLECTUAL PROPERTY
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 22, 2005
__________
Serial No. 109-56
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
______
U.S. GOVERNMENT PRINTING OFFICE
23-572 WASHINGTON : 2005
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001
COMMITTEE ON THE JUDICIARY
F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
HENRY J. HYDE, Illinois JOHN CONYERS, Jr., Michigan
HOWARD COBLE, North Carolina HOWARD L. BERMAN, California
LAMAR SMITH, Texas RICK BOUCHER, Virginia
ELTON GALLEGLY, California JERROLD NADLER, New York
BOB GOODLATTE, Virginia ROBERT C. SCOTT, Virginia
STEVE CHABOT, Ohio MELVIN L. WATT, North Carolina
DANIEL E. LUNGREN, California ZOE LOFGREN, California
WILLIAM L. JENKINS, Tennessee SHEILA JACKSON LEE, Texas
CHRIS CANNON, Utah MAXINE WATERS, California
SPENCER BACHUS, Alabama MARTIN T. MEEHAN, Massachusetts
BOB INGLIS, South Carolina WILLIAM D. DELAHUNT, Massachusetts
JOHN N. HOSTETTLER, Indiana ROBERT WEXLER, Florida
MARK GREEN, Wisconsin ANTHONY D. WEINER, New York
RIC KELLER, Florida ADAM B. SCHIFF, California
DARRELL ISSA, California LINDA T. SANCHEZ, California
JEFF FLAKE, Arizona CHRIS VAN HOLLEN, Maryland
MIKE PENCE, Indiana DEBBIE WASSERMAN SCHULTZ, Florida
J. RANDY FORBES, Virginia
STEVE KING, Iowa
TOM FEENEY, Florida
TRENT FRANKS, Arizona
LOUIE GOHMERT, Texas
Philip G. Kiko, General Counsel-Chief of Staff
Perry H. Apelbaum, Minority Chief Counsel
------
Subcommittee on Courts, the Internet, and Intellectual Property
LAMAR SMITH, Texas, Chairman
HENRY J. HYDE, Illinois HOWARD L. BERMAN, California
ELTON GALLEGLY, California JOHN CONYERS, Jr., Michigan
BOB GOODLATTE, Virginia RICK BOUCHER, Virginia
WILLIAM L. JENKINS, Tennessee ZOE LOFGREN, California
SPENCER BACHUS, Alabama MAXINE WATERS, California
BOB INGLIS, South Carolina MARTIN T. MEEHAN, Massachusetts
RIC KELLER, Florida ROBERT WEXLER, Florida
DARRELL ISSA, California ANTHONY D. WEINER, New York
CHRIS CANNON, Utah ADAM B. SCHIFF, California
MIKE PENCE, Indiana LINDA T. SANCHEZ, California
J. RANDY FORBES, Virginia
Blaine Merritt, Chief Counsel
David Whitney, Counsel
Joe Keeley, Counsel
Ryan Visco, Counsel
Shanna Winters, Minority Counsel
C O N T E N T S
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SEPTEMBER 22, 2005
OPENING STATEMENT
Page
The Honorable Lamar Smith, a Representative in Congress from the
State of Texas, and Chairman, Subcommittee on Courts, the
Internet, and Intellectual Property............................ 1
The Honorable Howard L. Berman, a Representative in Congress from
the State of California, and Ranking Member, Subcommittee on
Courts, the Internet, and Intellectual Property................ 9
WITNESSES
Mr. Daniel A. Updegrove, Vice President for Information
Technology, University of Texas at Austin
Oral Testimony................................................. 11
Prepared Statement............................................. 14
Mr. Richard Taylor, Senior Vice President, External Affairs and
Education, Motion Picture Association of America (MPAA)
Oral Testimony................................................. 35
Prepared Statement............................................. 37
Mr. Norbert W. Dunkel, Director of Housing and Residence and
Education, University of Florida
Oral Testimony................................................. 41
Prepared Statement............................................. 43
Mr. William J. Raduchel, Chairman and Chief Executive Officer,
Ruckus Network
Oral Testimony................................................. 50
Prepared Statement............................................. 52
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Report from the Joint Committee of the Higher Education and
Entertainment Communities submitted by the the Honorable Lamar
Smith, a Representative in Congress from the State of Texas,
and Chairman, Subcommittee on Courts, the Internet, and
Intellectual Property.......................................... 3
APPENDIX
Material Submitted for the Hearing Record
Prepared Statement of the Honorable Howard L. Berman, a
Representative in Congress from the State of California, and
Ranking Member, Subcommittee on Courts, the Internet, and
Intellectual Property.......................................... 63
Prepared Statement of the Honorable John Conyers, Jr., a
Representative in Congress from the State of Michigan, and
Member, Subcommittee on Courts, the Internet, and Intellectual
Property....................................................... 64
Prepared Statement of the Honorable Adam B. Schiff, a
Representative in Congress from the State of California, and
Member, Subcommittee on Courts, the Internet, and Intellectual
Property....................................................... 65
Prepared Statement of Frederic Hirsch, Senior Vice President,
Intellectual Property Enforcement, Entertainment Software
Association (ESA).............................................. 65
Supplementary Statement of Daniel A. Updegrove, Vice President
for Information Technology, University of Texas at Austin...... 69
REDUCING PEER-TO-PEER (P2P) PIRACY ON UNIVERSITY CAMPUSES: A PROGRESS
UPDATE
----------
THURSDAY, SEPTEMBER 22, 2005
House of Representatives,
Subcommittee on Courts, the Internet,
and Intellectual Property,
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to notice, at 9:15 a.m., in
Room 2141, Rayburn House Office Building, the Honorable Lamar
Smith (Chair of the Subcommittee) presiding.
Mr. Smith. The Subcommittee on Courts, the Internet, and
Intellectual Property will come to order.
I have to tell you, I do think several Members are on the
way, but apparently this is an early hour for a number of them.
In point of fact, we originally were going to meet at ten
o'clock and, because of conflicts with other Subcommittees, we
needed to move up our hearing time. I can only say that I am
grateful that the witnesses are all here and that there is
still a large audience who are interested in the subject at
hand.
We are going to proceed, incidentally, with the agreement
of the Ranking Member, Mr. Berman, who is on the way but will
be delayed a few more minutes. I am going to recognize myself
for an opening statement, and then we'll move on and begin to
hear from the witnesses.
Today the Subcommittee will receive an update on the
progress that has and has not been made in combatting peer-to-
peer piracy on university campuses. First, let me note that
there have already been several significant actions that have
occurred off of the university campuses. Only a few months ago,
the Supreme Court clearly delineated the lability of P2P
software providers. Until this decision was released, certain
P2P providers had consistently disclaimed any liability for the
piracy that their software enabled. Now many of these services
are trying to become distributors of legal sources of content.
However, universities are aware P2P piracy flourishes, and I am
pleased to see progress on many campuses in combatting such
piracy.
Copyright issues are no longer an afterthought at many
universities. During the last academic year, several
universities offered legal services to lure students away from
illegal downloading and file sharing. Other institutions
offered serious education programs or better enforcement of
their copyright policies.
Coming from high school environments where copyright issues
are usually ignored, or simply unknown to parents and teachers,
college students are ready to use the high-speed Internet
connections as a source of free content. While college students
often test boundaries, campuses should not be places where
illegal activity becomes a routine of a student's life that
will only continue after their graduation.
Universities have recognized their part, and their
educational mission is not only centered on turning out
architects, lawyers, nurses, musicians, and economists. Their
mission also includes graduating well-rounded individuals who
respect others as well as the laws of the country.
Several years ago, it was obvious that respect for the
nation's copyright laws was not a high priority of many
university students or their universities. To address this
issue, a joint university content owners group was created in
2003. Co-chaired by Graham Spanier at Penn State and Cary
Sherman of RIAA, this working group has met regularly to bring
together groups that have rarely interacted before. This
working group has provided the Subcommittee with an update of
its activities in its written submission today.
The Subcommittee will hear today from two universities,
including one from my own district. Both universities have
undertaken several efforts related to student education,
ranging from copyright information provided on orientation day
to automated systems that warn students of conduct not
permitted under university guidelines.
We will also hear from one provider of legal content to
universities, and the experiences that they have had. Finally,
we have a representative of a content trade association, who
can speak to the increasing use of high-speed university
networks to transfer large video files. This is a good time to
understand why some universities have clearly stepped up to the
plate of educating their students, while others simply have
not.
The Subcommittee will continue to hold hearings on P2P
piracy to monitor progress and to update Congress on what still
needs to be done.
I mentioned in my opening remarks a minute ago the Joint
Committee of the Higher Education and Entertainment Communities
that had been meeting since 2003. One of the co-chairmen of
that group is Cary Sherman, who happens to be in the audience
today. Glad to see you. And since you're here, I want you to
note that we're going to, without objection, be putting in the
record your most recent report that we saw yesterday.
[The information referred to follows:]
Report from the Joint Committee of the Higher Education and
Entertainment Communities submitted by the the Honorable Lamar Smith, a
Representative in Congress from the State of Texas, and Chairman,
Subcommittee on Courts, the Internet, and Intellectual Property
Mr. Smith. And also, maybe just as a part of my opening
statement, let me read a couple of the conclusions from that
report, as well:
``This joint committee today issued an update to Congress
outlining the latest efforts to address illegal file sharing on
campuses and the emerging challenges ahead.''
According to the report, and this is the good news:
``The number of schools with legitimate services on campus
has more than tripled, to nearly 70 in the last year.''
Now, that's the good news. The other news is that,
according to the report, student-run file-sharing systems on
schools' local area networks, as well as the increased use of
unauthorized hacks of the legitimate online services, iTunes,
are emerging as significant problems. So obviously, there's
much work to be done, but we are making progress.
That concludes my opening statement, and the gentleman from
California, Mr. Berman, is recognized for his.
Mr. Berman. Well, thank you very much, Mr. Chairman, and
I'm sorry I was late. But I personally appreciate you
scheduling this hearing on campus-university peer-to-peer
piracy.
I think there's no question of the devastating impact
piracy has had on the entertainment industry: a serious decline
in total value at the retail level. In March 2005 alone, 243
million songs were downloaded from illicit peer-to-peer
services. It's estimated that approximately 400,000 films are
illegally downloaded every day.
But when it comes to downloading content that is not paid
for, there seems to be a disconnect between--there's a
disconnect that students exhibit between intellectual knowledge
and actual behavior.
There was a very telling discussion that occurred during a
program about P2P file sharing organized by my colleagues, Adam
Schiff and Linda Sanchez, and me, for students from different
colleges who are interning on the Hill. The students all
acknowledged that downloading content from P2P networks was
possibly morally wrong, probably legally wrong, and potentially
harmful to their own networks from spyware or adware; yet many
of them continue to use P2P file-sharing as a means of
obtaining music, movies, television shows, and games.
At this hearing last year, Gordon Spanier--Graham Spanier--
one of the chairs of the joint committee, and a man who's
really a visionary in undertaking the lion's share project at
Penn State, testified, ``I don't think there is any one part of
the solution. It has to be a set of variables that universities
use to bring about progress in this area.''
Awareness of the effects and solutions to the piracy
problem can be addressed through education, enforcement,
technological improvements, and affordable legitimate
alternatives. The good news, in no particular order, is that
there has been progress on every front. The Supreme Court's
decision in Grokster set a clear message that companies that
encourage theft can be held liable. Immediately after the
decision, iMesh, one of the original peer-to-peer services,
announced the transition from a free to commercial-based,
authorized P2P business model, which ensures competition to
creators--compensation to creators. Others began to follow
suit. As late as this week, Grokster itself is rumored to be
attempting to turn legit.
Since the Grokster decision, there have been other positive
impacts on campuses around the country. The University of
California and Cal State University, two institutions I know
well, announced a deal with Cdigix which provides
administrators at all 13 UC and 23 Cal State campuses the
option of offering online music and movie sales to students.
Of course, providing students with legitimate alternatives
to the KaZaAs and the Groksters is a key part of any solution
to the piracy problem. But as the report released yesterday by
the Joint Committee on Higher Education and Entertainment
Communities indicates--the report that the Chairman referred to
at the end of his opening statement--we have a long way to go.
Free is still an option; and while the Grokster decision
may have stemmed the wave of piracy, many continue to ride that
wave and persist in illegally downloading music, movies, and
software. Again, as the report mentioned, we have to confront
the piracy which takes place on the schools' local area
networks and the increased use of unauthorized hacks of
legitimate online services.
Just this Monday, the movie industry announced a concerted
effort dedicated to mitigating the effects of piracy. The goal
of the new non-profit research and development company, Motion
Picture Laboratories Inc.--``MovieLabs'' it's known as--will be
to create new technologies to protect the distribution of films
and other works, as well as to protect against electronic
theft, particularly on the Internet.
Just last week, RIAA and MPAA joined Internet2, something
we had been concerned about. They joined as corporate members,
with the objective of working together on new technologies for
secure digital distribution.
It is the combination of the many methods, and not just one
silver bullet, that will address the campus peer-to-peer issue.
Perhaps, as more simply put by Aristotle--that's what good
staff is for--``In educating the young, we use pleasure and
pain as rudders to steer their course.'' I could give you the
exact cite, if you'd like. [Laughter.]
The universities and content providers must educate well;
as it is this future generation which will educate the next. I
look forward to hearing from the witnesses. Thank you, Mr.
Chairman.
Mr. Smith. Thank you, Mr. Berman. I liked your quote by
Aristotle. I don't think you've ever quoted him before.
Mr. Berman. I have. I have on many occasions, but not in
this Subcommittee. [Laughter.]
Mr. Smith. Okay. I won't ask you for the reference for the
quote, either. But, appreciate your comments.
Before I introduce our witnesses, would you all stand and
be sworn in, please.
[Witnesses sworn.]
Mr. Smith. Our first witness is Daniel Updegrove, Vice
President for Information Technology at the University of Texas
at Austin, where he is responsible for the university's
information technology. He is also an adjunct faculty member at
the UT School of Information.
Mr. Updegrove is a member of the Network Planning and
Policy Advisory Council of Internet2, and is on the Board of
the World Congress on Information Technology for 2006. Mr.
Updegrove previously held positions at Yale University; the
University of Pennsylvania; Educom; the National Bureau of
Economic Research; and Cornell University, where he did his
undergraduate and graduate studies.
Our second witness is Richard Taylor, Senior Vice
President, External Affairs and Education, at the Motion
Picture Association of America. Mr. Taylor joined MPAA in 1995.
In his current position, he is responsible for forging
partnerships and strategic alliances on behalf of MPAA, as well
as increasing outreach to students, teachers, and
administrators. Mr. Taylor graduated from Brown University in
1986, with a bachelor of arts degree in history. He has also
studied public policy at American University.
Our third witness is Norbert Dunkel, Director of Housing
and Residence and Education at the University of Florida. His
primary responsibilities include serving as chief housing
officer for 9,000 students and their families. Mr. Dunkel
serves on the executive board of the Association of College and
University Housing Officers International. He has also authored
or edited eight books and monographs and over 40 other
publications on various aspects of campus housing.
In 2003, his network services staff developed the
groundbreaking software platform ``Icarus,'' which has
transformed the University of Florida housing network through
education and mitigation of peer-to-peer file sharing.
Our final witness is William Raduchel, Chairman and Chief
Executive Officer of Ruckus Network, a digital entertainment
service for universities. Before joining Ruckus Network, Mr.
Raduchel served as executive vice president and chief
technology officer at AOL/Time Warner, and as chief strategy
officer for Sun Microsystems. Named CTO of the Year in 2001 by
InfoWorld Magazine, Mr. Raduchel has been a professor of
economics at Harvard University, and holds several issued and
pending patents. After attending Michigan Technological
University, Mr. Raduchel received his undergraduate degree in
economics from Michigan State University, and earned his AM and
PhD degrees in economics at Harvard University.
Without objection, your entire opening statements will be
made a part of the record, but please limit your oral testimony
today to 5 minutes. And I thank you all, and Mr. Updegrove,
we'll begin with you.
TESTIMONY OF DANIEL A. UPDEGROVE, VICE PRESIDENT FOR
INFORMATION TECHNOLOGY, UNIVERSITY OF TEXAS AT AUSTIN
Mr. Updegrove. Good morning, Chairman Smith, Ranking
Democratic Member Berman, and Members of the Subcommittee.
Thank you for this opportunity to discuss the University of
Texas at Austin's approach to reducing peer-to-peer piracy on
our data network.
Let me begin by stating that the university is dedicated to
developing leaders who exhibit responsible and ethical civic
behavior, whether in the real or virtual world.
Founded in 1883, UT Austin is the flagship of the 15-campus
University of Texas system. Of 50,000 enrolled students, 6,500
reside in campus housing, and approximately 95 percent own
computers. Already one of the largest U.S. campuses, our ranks
increased when we welcomed 425 students and 20 faculty members
displaced by Hurricane Katrina. I can't predict what our
enrollment will be next week.
The campus data network, UTnet, links to the commodity
Internet, Internet2 Abilene Network, NSF TeraGrid, Texas
Lonestar Education And Research Network, and National
LambdaRail. UTnet serves 55,000 computers on campus, and 1,300
wireless access points.
Management of information and technology resources is based
upon four principles: respect for intellectual property,
including its fair use in the academic setting; respect for
privacy and academic freedom of students, faculty, and staff;
compliance with law and UT regents rules; and stewardship of
our financial resources.
Quoting from our policy:
``It is a violation of university policy and Federal law to
participate in copyright infringement. Copyrighted materials
include, but are not limited to, computer software, audio and
video recordings, photographs, and written material. Violators
are subject to university discipline, including suspension, as
well as legal liability, even if the work did not contain a
written copyright notice. It is a violation to use your
computer to copy, display, or distribute copyrighted materials
such as software, MP3 files, or MPEG files illegally.''
This policy is supported by extensive information programs,
a network bandwidth monitoring system, compliance with the
Digital Millennium Copyright Act, and campus-wide licensing of
security-related and other software.
Our staff conducts a mandatory orientation for freshmen
before they can obtain IT services. We highlight use policy and
respect for copyright, which are reinforced by posters and
screen savers in computer labs focused on risks of illegal
music sharing.
This year, we added a streaming video program on IT policy,
security, and copyright concerns. I welcome the opportunity for
you to view the video, and will be happy to make it available
to you.
While they represent only 13 percent of total enrollment,
students in our residence halls receive special attention,
since they are more likely to use network connections for
recreation. Students pay a fee to access the residential
network, and their use of external bandwidth is subject to
weekly limits.
Our website lists legal alternatives for obtaining music
and videos over the Internet, including Apple's iTunes Music
Store, Napster, Ruckus, and others. UT monitors experiences of
universities that provide blanket access to commercial services
either at no cost to students or at substantial discounts. The
no-cost model holds little interest for us, however; as it
would require either a diversion of scarce academic funds or a
universal fee imposed on students who may not use the service.
One or more optional services available at discount would be
more attractive; although the take-up rate for such services on
other campuses appears to have been low.
Monitoring of data traffic is not limited to students in
ResNet. We have established a set of predicted patterns of
external network usage, as well as programs to detect unusual
activity. Substantial traffic into and out of UTnet may be
normal for key servers supporting research, instruction, and
administration, but elsewhere could merit further scrutiny. We
believe students subject to network authentication and
bandwidth quotas are less likely to engage in piracy and other
illegal behavior.
DMCA compliance is entrusted to the information security
office, which responds within one business day to any
complaint. First offenders receive a warning, 71 percent of
which elicit a response and are closed out within 24 hours.
Close-out requires take-down of any copyrighted material and a
first-offense official referral to the dean's office. In the
rare case of a second offense--only eight in the past 14
months--access is automatically disabled, and a student must
meet with student judicial services before service can be
restored.
Respect for intellectual property at UT is not limited to
music and video file sharing. The university licenses a broad
suite of security and other software. And UT's software
licensing supports copyright compliance, as well, since one
source of pirated content is insecure computers hijacked via
the Internet.
UT and other members of the Internet2 consortium are aware
of the rogue i2Hub file-sharing system that uses the Internet2
Abilene network for data transport. This activity is in no way
affiliated with or endorsed by Internet2 or any of its 207
university members. At UT Austin any illegal use of i2Hub is
subject to the same sanctions as other violations.
Looking forward, UT Austin is critically dependent on
access to information, computational resources, and
collaborators around the world. Technological innovation is
transforming what, whom, and how we teach; the foci and
methodology of our research programs; and our ability to serve
society.
Critical to innovation and service to society, as
anticipated by the framers of the Constitution, is a balanced
view of copyright. As the pace of innovation increases, the
university is committed to participating in this ongoing
discourse with our partners in industry and Government, to
maintain the balance. Thank you very much.
[The prepared statement of Mr. Updegrove follows:]
Prepared Statement of Daniel A. Updegrove
Mr. Smith. Thank you, Mr. Updegrove.
Mr. Taylor.
TESTIMONY OF RICHARD TAYLOR, SENIOR VICE PRESIDENT, EXTERNAL
AFFAIRS AND EDUCATION, MOTION PICTURE ASSOCIATION OF AMERICA
(MPAA)
Mr. Taylor. Thank you, Chairman Smith, Ranking Member
Berman, and Members of the Subcommittee, for the opportunity to
appear here today. I have the privilege of representing the
member company studios of the MPAA and the hundreds of
thousands of workers within our great industry.
I'm particularly grateful that this Subcommittee has
recognized the pivotal role the university environment can play
in curtailing theft of movies and other copyrighted works
online. The U.S. Supreme Court in the recent Grokster case
cited earlier not only clarified its Sony Betamax decision, it
voiced a very clear message to users of the Internet: theft of
intellectual property is wrong; whether it takes place by
stealing a physical copy from a video store, or downloading it
in cyberspace. As Justice Breyer said in his concurring
opinion, ``Deliberate, unlawful copying is no less an unlawful
taking of property than garden-variety theft.''
The Members of this Subcommittee are well aware that piracy
is the greatest obstacle facing our industry. And I'd like to
use my time today to outline some measures we are taking and
recommending in order to reduce current online theft levels.
As mentioned earlier by Ranking Member Berman, we have
recently had two significant announcements that are reflective
of our industry's tradition of being at the forefront of
technology. Along with RIAA, we announced that we've formally
joined Internet2 as a corporate member. And we plan to
collaborate with the IT community to develop innovative content
distribution and DRM technologies. We're excited at the
opportunities the emerging technologies bring as a means to
allow more people safe and legal access to movies and
television programming.
Earlier this week, we also announced the establishment of
Movie Labs. This industry-funded initiative will be dedicated
to advancing the future of distribution by identifying secure
means of protecting our valuable creative works.
Now, another essential area of focus for our industry is
the education community. And in recognition of that, MPAA
president Dan Glickman recently established a new external
affairs and education department within our organization,
dedicated to this mission, which I'm privileged to lead. And
through face-to-face meetings with university administrators
and students across the nation, we've begun to identify best
practices that, when in place, can significantly reduce campus
network abuse. These practices target four key areas:
technological measures, the offering of legitimate
alternatives, education, and enforcement.
Now, there are innovative and effective technological tools
available right now, today, that can greatly reduce campus
network piracy. In Grokster, the Supreme Court found that,
``there is evidence of infringement on a gigantic scale'' on
P2P systems. Studies have also shown the prevalence of
pornography, identify theft, spyware, viruses, and other
malware, courtesy of these P2P services. And therefore, it
seems appropriate to restrict illicit P2P access in university
networks.
The University of Florida, with Icarus, has impressive
statistics that show how restricting access to illicit P2P can
be a tremendous benefit to an institution. I believe Mr. Dunkel
will be sharing some of those stories with us shortly.
Other technological options include network filtering,
which filter out infringing transmissions by matching their
fingerprints against a master database. Also available are
bandwidth shaping tools, which ratchet down bandwidth
allowances for users systemwide or individually, and thus limit
the volume of uploading and downloading taking place.
Legitimate services, as the Chairman referenced, can also
play an important role in encouraging legal activity on campus.
However, the experience of our friends in the music industry
has shown the legitimate services can best take root once
technological measure to block illicit P2P have been adopted on
campus.
It's critical that students being prepared for their place
in society are encouraged to obtain their entertainment
legally, and not via illegal P2P means. It's also critical that
colleges and universities clearly and repeatedly inform
students of the importance of respecting copyrighted works,
campus policies, and the law.
Some suggested steps in the area of education include:
Clear acceptable use policies, easily accessible by school
network users, not buried several clicks within a site;
Orientation materials should include information on
copyright and illegal file theft;
Parents, through letters and orientation sessions, should
also be informed of the seriousness of the issue and the legal
and institutional penalties that await violators;
Students should be required to take and pass a brief quiz
reflecting school policy regarding their network use;
And universities should implement visible, pervasive anti-
piracy campaigns throughout the campus.
In order to make clear the institutional commitment to its
policies, enforcement measures must be consistent and
meaningful. We've found that recidivism is low at those schools
with well defined and applied enforcement policies. And I would
add that, while we are encouraging strong enforcement by
university administrators, we continue to take enforcement
actions ourselves in order to protect our creative works. A
prime example is our actions against users of the i2Hub system
referenced earlier.
Now, we believe that application in these four areas will
greatly deter and reduce piracy, while making clear to students
the universities take seriously this issue.
I thank the Chairman, the Ranking Member, and all Members
of this Subcommittee for holding this hearing. I would ask that
if any Members of this Subcommittee have institutions within
their district they would like for us to specifically reach out
to, we'd welcome that opportunity. And the MPAA would also
welcome an opportunity to return before this Subcommittee at a
later date, to reexamine the piracy landscape at colleges and
universities.
I look forward to answering any questions that you may have
about this important matter. Thank you.
[The prepared statement of Mr. Taylor follows:]
Prepared Statement of Richard Taylor
On behalf of Dan Glickman and the companies that comprise the
Motion Picture Association of America, I very much appreciate this
opportunity to testify about the film industry's efforts to address
peer-to-peer (P2P) piracy on university campuses. The livelihoods of
nearly one million men and women in America are impacted by the film
and television industry, which entertains millions of consumers every
day.
Piracy is the greatest obstacle the film industry currently faces,
costing our industry approximately $3.5 billion annually due to hard
goods piracy of DVDs and VCDs alone. Deloitte and Touche estimates that
approximately 400,000 films are illegally downloaded every day.
CacheLogic, an Internet monitoring group, has estimated that over 60
percent of all Internet traffic in the U.S. is attributable to peer-to-
peer usage. In Asia, over 80 percent of all traffic on the web is from
P2P. Furthermore, well over 90 percent of all the content on P2P
networks consists of unauthorized copyrighted files.
In light of these facts, it is important to understand that the
film industry rests upon a fragile fiscal base. Each film is a massive
upfront investment with absolutely no guarantee of return. The average
film costs over $100 million to make and market. Only one in ten films
recoups this investment through its theatrical release. Six in ten
films never break even. To recoup the considerable investment required
to make and market a movie, the film industry relies on foreign
distribution and ancillary markets (home video/DVD, pay per view,
premium cable, basic cable, free TV, etc.) to make a profit or break
even. It is these ancillary markets, especially home video and foreign
distribution--economic engines that are essential to this industry--
that are most vulnerable to the corrosive effects of film piracy.
Contrary to the repeated accusations of those who oppose reasonable
content protections, the film industry has always been in the forefront
of technological innovation: DVDs represent but one example. This
tradition is even more important now, and the MPAA is working with the
technology sector to help move our industry into the future. Our
consumers have clearly shown a desire for more choices and flexibility
in their filmed entertainment choices, and in turn the MPAA and its
member companies are heavily involved in ongoing efforts to create the
next generation of secure digital delivery platforms to meet that need.
We recognize that the speeds of transfer so dazzling today will likely
seem akin to a horse and buggy when new technologies such as Internet2
become the standard. To that end, two weeks ago MPAA joined Internet2
as a corporate member. MPAA plans to collaborate with the Internet2
community to consider innovative content distribution and digital
rights management technologies, and to study emerging trends on high-
performance networks to enable future business models. We view secure,
high speed Internet delivery of films as being integral to our
industry's future, and we are excited by the possibilities this
collaboration presents.
In addition, MPAA this week announced the establishment of ``Movie
Labs,'' a research and development venture that will develop copyright
management and other technologies to protect against piracy. The future
of film depends upon the development of innovative delivery
technologies allowing new, user-friendly business models, and the film
industry is diligently working to make these technologies a reality. So
you can see that, while we continue our appeal for others to do their
part in preventing the illegal abuse of copyrighted works, we are
appropriately taking the lead in this regard.
I am particularly grateful that this Committee has recognized the
pivotal role the university environment can play in curtailing the
theft of movies and other copyrighted works online. As you are well
aware, college campuses today harbor some of swiftest computer networks
in the country and that, unfortunately, has led to a situation where a
significant level of piracy is taking place around the clock on our
nation's campuses.
The MPAA is aware of the critical need to reach out to the
education community, from elementary school-aged students to university
administrators, in order to tackle head-on the threat of piracy and to
stem the disturbing societal trend of illegal activity online by
students of all ages. That is why Dan Glickman has established a new
enterprise within the MPAA called External Affairs & Education. This
new department, which I am honored to head, is dedicated to working
with educators, administrators and student leaders to affect behavior
and policy.
Since the establishment of this new department within MPAA, I have
been spending a good bit of my time on the road, traveling to a dozen
campuses and convening face to face meetings with administrators and
students. Dan Glickman will also be doing a speaking tour of college
campuses. The chief goal of these sessions has been to learn more about
what universities are currently doing to address this issue of piracy.
Truly, we are just at the start of the MPAA university initiative, so
it is somewhat premature at this point to gauge success. However, as we
get farther along into it, I would welcome the opportunity to report
back to the Subcommittee about the successes we do achieve, and any
ongoing obstacles we face.
Even at this early stage, however, it is clear that there are a
range of measures available to universities today that can
significantly reduce piracy on campus. This emerging set of what the
MPAA would call ``Best Practices'' provides a roadmap for
administrators to follow in order to meaningfully impact the problem of
network abuse and illegal copyright theft. I'd like to use the
remainder of my time to share with this Committee what we have
discovered and what we would recommend university administrators adopt
to impede their students' illegal activity via campus networks.
Our suggestions focus on four areas in which schools have taken
action: (i) network filters and other technological measures, (ii)
legitimate online services, (iii) education, and (iv) enforcement.
Undoubtedly, education and enforcement continue to be important
components in any program schools undertake to address piracy. However,
experience has shown that the offering of a legitimate online service,
coupled with an effective network technology that decreases or,
preferably, eliminates illicit peer-to-peer (``P2P'') file-sharing
traffic, produces the best results for colleges and universities.
TECHNOLOGICAL MEASURES
As you are undoubtedly aware, a significant proportion of piracy on
campus is occurring through illicit P2P services, which enable
individuals to copy and distribute millions of unauthorized songs,
movies, software applications and games. The P2P applications that
enable this illegal activity, freely available as downloads over the
Internet, are hugely popular at colleges and universities where
students have access to extremely fast computing networks.
In the much-publicized Grokster case, the U.S. Supreme Court
recently stated that ``there is evidence of infringement on a gigantic
scale'' on P2P systems, and it has been estimated that over 90 percent
of the use on these systems is infringing. (Of course, other studies
have also reported that pornography, including child porn, and identity
theft are prevalent on such systems.) With such a disproportionate
amount of illegal traffic on certain P2P protocols (and given the
threat to network security and individual PCs from viruses and other
malware), it seems entirely appropriate to restrict the use of these
illicit P2P systems generally. While prohibiting the use of
predominantly illegal P2P applications, universities can still protect
and promote the legitimate use of other P2P applications for research
and scholarship.
This approach has already been employed at certain universities to
extraordinary effect. For example, the University of Florida developed
Icarus, a network-based system, that can selectively prohibit the
transmission of any information bearing the signature of an unapproved
P2P application, and manages adherence to University policies. The
Icarus architecture supports other capabilities to address the full
range of security management issues including: viral and worm attacks;
spyware; and other outbound malicious behavior. All of these can have
huge effects on the operation and cost efficiencies of the university
network.
Some statistics on implementation of Icarus tell the whole story.
In the first year of operation, there were nearly two thousand students
that attempted to use P2P systems. They were effectively stopped and
reminded online through an educational message that such activity was
against University policy. Only 20 percent tried a second time and only
2 percent a third time. As new classes of students were introduced in
the next two academic years, these numbers were reduced by 50% and 80
percent respectively. Additionally, the school has received no DMCA
infringement notices since the inception of Icarus. Additionally, last
year the developers of ICARUS were recognized by the Davis Productivity
Awards for their work. The awards are part of a government improvement
initiative in Florida and sponsored by Florida TaxWatch. The awards
panel estimated that ICARUS saved the University of Florida nearly
$500,000 by reducing the flow of illicit P2P onto UF computer networks
and automating the notification process when a violation of policy did
occur.
While exceptions can be made for appropriate use of such
applications, it is not surprising that the school has received very
few requests for permission to use illicit P2P systems. Indeed, it is
questionable whether such P2P applications are at all necessary (or
beneficial) in an academic environment. Faculty and students remain
able to share and distribute academic material through such secure and
reliable means as websites, FTP, and email. In addition, there are
legitimate and licensed P2P networks emerging--such as Penn State's
LionShare--which are dedicated to, and specially configured for,
academic environments.
Should a university not find feasible the implementation of
programs such as Icarus, MPAA suggests installing a network filtering
system. Rather than prohibiting all P2P or other applications based on
a particular protocol, these systems filter out infringing
transmissions by matching them against a master database. While these
types of applications are content-based filters, this technology is in
fact no more intrusive than what most schools are already employing to
scan for viruses and other malware.
A third option is to effectively implement a bandwidth shaping tool
such as Packeteer. Although limiting the resources available for
infringement is always a positive step, the way such technology is
being implemented at most schools too often renders the application
ineffectual. These schools ratchet down bandwidth allowance during the
peak hours of the day, then provide increased bandwidth at night. While
this process may indeed reduce infringement to some extent, it
unfortunately sends the wrong message that illegal file-sharing is
acceptable--as long as it's done at certain times. This is a minor and
short-term fix for a much larger and long-term problem. By sanctioning
such ``windows of infringement,'' schools do little to discourage
students from engaging in piracy (and, of course, fail to impart a
sense of ethical behavior and appropriately prepare their students for
life after college as moral and law-abiding citizens).
By employing technologies that prohibit infringement-based P2P-
networks on campus or at least make it harder for students to infringe
on such systems, schools are laying the groundwork for the second
component of a proven anti-piracy campaign: the successful
implementation of a legitimate online service on campus.
LEGITIMATE ONLINE SERVICES
Adoption and sign up rates of legitimate online music and movie
services by students is often highest when the school has first reduced
the availability of illegal file-sharing, thus developing the thirst
for legal content. Services and schools alike have reported
particularly positive results from this staggered approach. (Experience
has also shown that it may be unwise to implement both network
filtering technology and a legitimate online service simultaneously, as
students tend to blame the online service for the cutoff in illegal
file-sharing.) Without first addressing the illicit P2P problem on
campus, it is extremely difficult for legitimate services to take root.
If students have unfettered access to enormous amounts of pirated
content, no service--regardless of pricing or content offerings--will
be successful in that environment.
Overall, the growth of legitimate online services at colleges and
universities across the country has been exceptional. In the past year
alone, the number of schools partnering with a legitimate service has
grown more than threefold to nearly 70. Services such as Cdigix,
Napster, RealNetworks's Rhapsody, and Ruckus offer students a wide
array of entertainment content in a fun, safe, and legal way, and help
to build a sense of community on campus
Of course, it is true that legitimate online movie services are not
yet a compelling substitute for the illegal P2P services. Besides the
little matter of price point, no legal online movie service currently
has the breadth of selection, new releases, ease of use, and
interoperability of the illegal P2P services.
Why is this? Not for a lack of incentive or effort. As for-profit
enterprises, MPAA member companies have every incentive to tap the
clear consumer demand for online access to movies. MPAA member
companies are committed to developing compelling, consumer-friendly
online movie services, and each one devotes considerable resources to
this effort. The MovieLabs and Internet2 announcements are just the
latest evidence of their commitment.
However, in order to protect their huge investments, our member
companies must ensure that their services operate in a secure
environment. Learning from the experience of the music industry with
its initial rollout of legal services, they also know it is critical
that the consumer's first experience with a legal service a happy one.
Thus, legal services must be out of beta and fully ready for mass
consumer adoption before they are rolled out widely.
EDUCATION
Obviously, education is an extremely important component of any
anti-piracy campaign. Colleges and universities are in the best
position to inform students of the importance of respecting copyright
and valuing the creative effort invested in copyrighted works. Further,
as creators, developers, and owners of intellectual property
themselves, colleges and universities have a huge incentive (and
responsibility) to instill in their students such respect and values.
The following are some examples of steps schools can take toward
educating students about illegal file-sharing and copyright
infringement generally:
Institute Acceptable Use Policies that clearly
outline the appropriate use of school resources. Such policies
should illustrate unacceptable behavior, including illegal
file-sharing, and provide details on penalties imposed for
failure to abide by such regulations. A comprehensive policy,
however, is only as useful as it is accessible; administrations
should conduct surveys or otherwise ensure that students (and
others) are able to find them, including on the school website.
Include information on copyright, piracy, and illegal
file-sharing in orientation materials.
Inform parents, through letters and at orientation,
of the seriousness of copyright infringement and the penalties
imposed, both legally and academically, for violations.
Encourage them to discuss the risks with their children.
Require students to pass a quiz about P2P and piracy
before allowing access to the school's computing network. This
educates the student and provides documentation negating any
claim of lack of awareness.
Engage students by incorporating discussion of
illegal file-sharing on school websites and radio stations, and
in papers and classrooms.
Launch pervasive and visible anti-piracy campaigns
using posters, brochures, banners, videos, fliers, etc.
Send students periodic emails directly from the
President/Provost/Dean to remind students that the school takes
copyright infringement very seriously and to indicate the
seriousness of any offense.
While it is indeed beneficial to offer an in-depth look at
copyright, P2P, and illegal file-sharing, the first step in any
educational campaign is to express concisely and unequivocally that
copyright infringement, through physical or online piracy, is illegal
and simply wrong. The U.S Supreme Court in Grokster not only clarified
its Sony Betamax decision, it voiced a very clear message to users of
the Internet: theft of intellectual property is wrong, whether it takes
place by stealing a physical copy of a movie from a video store or by
stealing a movie in cyberspace. As Justice Breyer said in his
concurring opinion, ``deliberate unlawful copying is no less an
unlawful taking of property than garden-variety theft.''
ENFORCEMENT
As with any education campaign, it is necessary to ensure adherence
to rules and regulations through consistent and meaningful enforcement
measures. The administration should remind students that entertainment
and other content industries have sought to enforce their copyrights
through lawsuits against students and other individuals. Students
clearly are not immune to legal action, and this awareness is reflected
in the many steps taken by schools to curb piracy on campus, as well as
in the overall change in attitude of administrations and students
alike. Yet, there undoubtedly remains a feeling by some students of
``safety in numbers'' inherent in a nationwide campaign. The threat of
disciplinary action by schools, however, resonates locally and can
quickly diminish the sense of security from enforcement (and anonymity)
mistakenly felt by students.
We are not suggesting that enforcement is solely the responsibility
of these institutions. In addition to bringing action against theft
enablers such as Grokster, our industry has also sued individuals
engaged in copyright theft. We have also pursued those using I2Hub, a
pirate file trading network catering exclusively to university
students. This ``darknet'' system took extraordinary steps to exclude
individuals from outside of university networks in order to frustrate
enforcement efforts by rights holders. However, our investigators were
able to learn a great deal about this phenomenon. For example, on April
11 at 4:23 p.m. EST, there were 7,070 users connected to I2hub sharing
99.21 Terabytes of content, enough space for 99,000 movies! As you can
see, this closed network of activity can inflict a great deal of
damage. I raise this particular form of piratical activity to
demonstrate that there are unique areas where we do need the university
networks administrators to be particularly aware and vigilant. The
scale and scope of illegal activity within this campus-linked arena is
significant.
I would like to add that school-wide Acceptable Use policies
regarding online piracy and the appropriate use of school resources are
not merely for the benefit of copyright owners. Such rules and
regulations, just as with those regarding hacking and other violations,
safeguard the security and integrity of the school's computing system.
Illegal file-sharing applications and illicit P2P networks threaten
such systems with increased bandwidth costs, as well as with malicious
viruses, worms, Trojan horses, and spyware.
Students should understand that there are extreme repercussions for
violation of these policies. Accordingly, schools must be diligent in
learning of such infractions and in carrying out swift and appropriate
punishment. Most schools take a tiered ``three strikes'' approach:
First offense: Remove the offending computer from the
network until the student complies with any obligations and
understands the repercussions for further violations. Some
schools require the student to talk to a University
administrator before network access is restored.
Second offense: Students lose network access for a
certain period of time. Some schools are increasingly imposing
fines.
Third offense: Students usually permanently lose all
network access privileges and must report to the Dean of
Students or Judicial Affairs for formal disciplinary
proceedings. While rare, some schools have suspended or even
expelled students for third offenses.
Of course, enforcement measures vary widely from school to school.
For example, Harvard University has stated that it will terminate a
student's network access for one year upon a second offense. Students
at UCLA will be summoned to the Dean of Students after their second
offense. In any case, experience has shown that recidivism is rare at
schools with well-defined and strongly-implemented policies.
It is important to note that the model enforcement policies
described above only work when a copyright owner is able to find an
infringement taking place and notifies the university. And, in most
cases, copyright owners will not be able to find all infringement on
campus. While setting out and implementing a strict enforcement program
is important, it is the application of effective technical measures
that can best stop the vast majority of piracy before it takes place.
This reduces the burden of processing potentially dozens of DMCA
notices and directly targets the problem of student piracy on
university networks.
We believe strongly that universities taking these measures will
significantly reduce the level of illegal activity taking place via
their networks by students under their charge.
While I know today's session is devoted to a discussion of college
campus piracy, I think it is worth noting that the MPAA is also working
diligently to reach and educate students at the secondary school level
as well as educating parents of school-aged children. We are working
with well-respected Internet safety organizations such as WiredKids and
iSafe to raise awareness and understanding of this issue to the
emerging generation of computer users so that, hopefully, when they do
arrive on the campuses of this nation, they will be better equipped to
understand and adhere to the rules of the university and the law of
this land.
I thank the Chairman, the Ranking Member and all Members of this
committee for holding this hearing. I know that if I were to ask anyone
in this room to name their favorite film, a lively conversation would
begin. Such is the love of this uniquely American art form and all the
more reason that we all have a stake in its continued health and
survival as well as the health of all of the creative industries from
music to books to software. The stakes are very high, not just for
those who have the privilege of working within these industries but to
the overall economy of this great nation.
Mr. Smith. Thank you, Mr. Taylor.
Mr. Dunkel.
TESTIMONY OF NORBERT W. DUNKEL, DIRECTOR OF HOUSING AND
RESIDENCE AND EDUCATION, UNIVERSITY OF FLORIDA
Mr. Dunkel. Thank you, Mr. Chairman, Ranking Member Berman,
and distinguished Members of the Subcommittee. Good morning,
and thank you for the opportunity to appear before you today. I
will provide you information regarding the education of college
and university residence hall students, stewardship of our
technological resources, and an update on a very successful
software program to mitigate P2P file sharing.
First, I want to take us back just a few years when we
lived in our college or university residence hall. You will
remember coming to college with one suitcase, a box, perhaps a
piece of carpet, a radio--and someone had the typewriter.
Today, our students are bringing color TVs and stereo DVD
players, refrigerators and video game systems, desktop
computers and laptops, along with their Blackberry, iPod, Nano,
Razor cellphone, and a lot of clothes.
It is this technology that they use to communicate, to
study, to receive entertainment, and to research. Today it's
more important to plug the computer in before they plug in
their refrigerator.
We now have over two million students living in residence
halls on campuses in the United States. One of the greatest
additions to campus life in recent years is the high-speed
Ethernet connection and wireless environments. These
connections are used to support the institution's mission by
allowing students access to online classes or class syllabi,
signing up for classes, replaying video classes, and the like.
We are seeing connection speeds that only seven or 8 years
ago were the slow dial-up modems, to speeds now at 1,000
megabits or a gigabit connection. As a comparison with the dial
modem, it would take a person about 29 hours to download the 2-
hour movie ``Star Trek.'' With a gigabit connection, it takes
about 6 seconds to download that same movie. Downloading music
files are inconsequential at that speed. The speed and
efficiency is tremendous, and will only continue to gain in the
future.
In the housing profession, we know we have a captive
audience. Most of the first-time-in-college students will live
in on-campus residence halls. We have an opportunity to educate
our residence students as to the acceptable use of their
computer and the network.
We also have a duty to be good stewards in maintaining our
technological infrastructure. A colleague and I found that 92
percent of institutions with high-speed connections actively or
passively educate their students. Some institutions, like the
University of Delaware, require students to take a responsible
computing exam before they can obtain a network ID and
password. The University of Hawaii in Moana has residents sign
for a handbook accepting responsibility for reading and
following the rules contained within.
At the University of Florida, residents register their
computer online and electronically sign that they have read,
understand, and will abide by the policies governing acceptable
use. We know that for some students reading the policies is all
they'll ever need. These students will accept the policies and
make no attempt to circumvent policies. For other students, we
need to be more active in our oversight and education.
To be good stewards of our technological infrastructure, my
staff developed software to serve as a new network management
program. We had to develop this software because the network
could no longer support the academic needs, due to high peer-
to-peer volume. One tool available through this program
mitigates illegal peer-to-peer file sharing, while continuing
to simultaneously educate students; all while maintaining a
network service free of illegal copyright sharing behaviors.
Before we turned on the Icarus program on October 1, 2003,
we were using 85 percent of the upload bandwidth of the entire
University of Florida pipeline. When Icarus was turned on, we
immediately dropped 95 percent of our impact on the upload
bandwidth, because we immediately stopped 3,000 students
illegally sharing copyrighted music. Perhaps amazingly, we saw
an increase in download bandwidth, because students were
migrating to legitimate network sites, such iTunes or streaming
radio. Since implementing Icarus, we have not received a DMCA
complaint.
We wanted first-time-in-college students to understand when
they arrive on campus and move into the residence hall a new
level of personal behavior and responsibility on the use of
their computers and Internet would be expected. Most students
arrive on campus having unabated access to the network, no
knowledge that they need to install virus protection; and they
allow anyone to use their computer with their password. The
education taking place on campuses stresses that students need
to take responsibility for their computer and the use of their
computer.
With me today is Mr. Rob Bird, the architect of the Icarus
software platform, and Rob is also available to answer any
technological questions surrounding Icarus. Thank you.
[The prepared statement of Mr. Dunkel follows:]
Prepared Statement of Norbert W. Dunkel
I want to thank you for the opportunity to appear before the
Subcommittee on Courts, the Internet, and Intellectual Property to
provide you information regarding the education of resident students
and a new approach to mitigating Peer To Peer (P2P) file sharing. With
me is Mr. Rob Bird the architect of the Icarus software platform.
There are over 2 million students living in residence halls on
campuses in the United States. Today, first year students are moving
into residence halls where suites and apartment style living is
becoming increasingly available. There exists greater studying and
recreational facilities; contemporary dining accommodations; and larger
rooms with more storage to name a few. However, one of the greatest
additions to residence halls has been the high speed Ethernet
connection.
The Ethernet connection in residence halls serves as its primary
purpose to support the academic mission. Many institutions, including
the University of Florida, utilize this high speed residential
connection for on-line classes; accessing on-line services (i.e., class
registration, room sign-up, ordering class textbooks, etc.); replaying
video classes; accessing class syllabi; working on group projects, and
the like.
We are seeing connection speeds that only seven or eight years ago
were the slow dial up modems to now 10 MB, 100 MB, or 1000 MB (1
Gigabit) speeds. As a comparison, with a dial up modem it would take a
person about 29 hours to download the two hour movie, Star Wars. With a
Gigabit connection it takes about 6 seconds to download that same
movie. The speed and efficiency of this technology is tremendous and
will continue to gain in the future.
In the housing profession and as a member of the Association of
College and University Housing Officers--International, we have two
duties regarding the data connections we provide to students in
residence halls. First, we have a duty to educate our resident students
as to the acceptable use of their computer and the network. Second, we
have a duty to be good stewards in maintaining the technological
infrastructure that we provide students in the residence halls.
EDUCATION
In educating the resident students, we know many of our housing
operations across the United States have integrated the academic
community within the residential setting. Institutions have residence
halls with live-in faculty, ``smart'' classrooms, faculty offices,
space for tutoring, space for academic advising, and the like. We see
science-based (i.e., engineering, math, etc.); education-based
(teaching, etc.); and fine arts-based (i.e., architecture, dance,
theatre, etc.) residentially-based academic communities. These types of
arrangements and others lead to increased grade points for residents,
increased graduation rates, increased respect for faculty, and
increased psychosocial development, to name a few. The education of our
students does not only take place in the classroom environment. The
classroom environment is now in the residential setting.
Accompanying the residential academic environment is the need for
housing operations to assist in the education of resident students on
acceptable uses of the technology available to them. In an on-going
study (J. Haynes and N.W. Dunkel, 2004), we have found that of the
institutions surveyed with high speed connections in residence halls,
92% actively or passively educate their residents on the acceptable use
of their computer and the Internet.
There exist a number of different approaches to this education. The
information that is shared with residents may be as simple as defining
terms and providing answers to frequently asked questions. The
information may provide a general overview of the various aspects of a
network and computer usage. At the University of Delaware students must
take a responsible computing exam before they can obtain a network ID
and password. The exam covers copyright resources, computer security,
spam and harassing e-mail, bandwidth measurement, and commercial and
charitable use. At the University of Hawaii in Manoa residents sign for
the handbook accepting responsibility for reading and following the
rules contained within. At the University of Florida residents register
their computer on-line and electronically sign that they have read,
understand, and will abide by the policies governing acceptable use.
We know that for some students reading the policies is all they
will ever need. These students will accept the policies and make no
attempt to circumvent the policies. For other students we need to be
more active in our oversight and education.
STEWARDS OF TECHNOLOGY
Housing professionals must be good stewards of the technological
infrastructure provided to students. The information that follows
provides a summary of the Icarus software platform developed by Mr. Rob
Bird.
Introduction
The University of Florida Department of Housing and Residence
Education's Mission Statement is to provide well-maintained, community-
oriented facilities where residents and staff are empowered to learn,
innovate, and succeed. As staff worked to develop a software program to
mitigate P2P file sharing, discussion continued on how to
simultaneously educate resident students while maintaining a network
service free of illegal copyright sharing behaviors. This was a
daunting task as most first year students arrive to campus having
practiced P2P file sharing at home during their high school years.
According to students, during high school years very little education
on illegal file sharing was provided either by their high school or by
their parents and student behavior remained unchecked.
University of Florida housing staff wanted resident students to
understand that when they arrive on campus a new level of personal
behavior and responsibility on the use of their computer would be
expected.
Icarus
Described as ``an extraordinary success'' (Sherman, 2004), Icarus
is a massively concurrent, distributed processing engine designed to
provide the power of collaborative grid computing to the enterprise
network management and security space. This patent-pending system is
based on the Java language. The Icarus engine has been built to act as
an open-standards middleware processor, allowing applications,
libraries and scripting languages to be harmoniously coordinated
together to accomplish tasks across the enterprise or federation. It
has extensive applications in distributed computing, security,
collaboration and management. By applying this system, a comprehensive
net has been constructed at the University of Florida to eliminate P2P
and residential `Dark Nets,' while comprehensively addressing the
educational needs of the students. In addition, Icarus integrates with
the University's Judicial Affairs, trouble ticket and network
management systems, solving all facets of the management problem.
Icarus is currently licensed to Red Lambda Software (www.redlambda.com)
by the University of Florida.
Department of Housing and Residence Education Network Architecture--
Technical
The University of Florida Department of Housing and Residence
Education computer network (DHNet) consists of Cisco switching
equipment, and supports standards-compliant TCP/IPv4-services for its
residents. The core network consolidates edge switches via Gigabit
Ethernet connections. Each resident is supplied with a 1 Gigabit
Ethernet connection, monitored and regulated by Icarus. Virtual LANs
are deployed on a per-building basis to provide proper segmentation and
encompass multiple levels of access granularity (Table 1). Specific
services are subsequently provided to the resident depending on the
source of access.
Development and Deployment of Icarus
Beginning in December of 2002, the Department of Housing and
Residence Education Network Services group initiated the development of
a system to automate the enforcement of its computer security policy.
The system that was created was known as Icarus.
Icarus was designed to meet three primary design goals. First, to
create a fully-distributed processing framework that allows for the
collection of information from a variety of disparate sources so that
the data can be evaluated and acted on in a unified fashion. Second, to
create a system that allows for the real-time identification,
containment, and education of managed network users while striving to
minimize the impact on their academic use. Third, to contribute to the
community software environment through the advance of internet
standards and technologies using BSD and GPL-style licenses.
Initial development of Icarus focused on three core tasks. First,
it was necessary to build a system for identifying users and tracking
hardware movement within the network while allowing for the flexibility
required of a residential system. The initial system comprised three
levels of access, and did not include a registration process for
residents. While this system was adequate for private residence port
authorization, it did not adequately support the use of public access
ports, accommodate Icarus' protection on wireless networks, or provide
a way to handle the containment of security outbreaks. This solution
was also deemed inefficient due to its heavy reliance on SNMP. Later,
this system was expanded to ten levels of access to address these
additional operational requirements, and moved to leverage VMPS for
superior access management. At this time, the Icarus team released the
first database-backed VMPS server to the open-source community. User
registration was also added to more positively establish authorization
without the use of network logon technologies, which are often
cumbersome in ``always-on'' residential environments. Second,
development was focused on containing P2P application use as an example
of Icarus' ability to detect and react to complex network management
situations. By combining data from a variety of tools, it became
possible to take an automated multi-factor approach to application
recognition. This approach allows Icarus to detect so-called ``secure''
encrypted P2P applications, and quickly react to both changing
applications and policy requirements. This flexibility is accomplished
by removing the reliance on a single application or appliance's ability
to fully identify and contain unacceptable P2P use, virii, malware and
other security challenges. Third, development was focused on creating
an extensible GUI interface to allow the management of large Icarus
`clouds' or collections of cooperating Icarus peers. This system makes
full use of open standards, and supports a federated management
architecture to allow organizational collaboration without exposing
organizational concerns.
EDUCATION OF RESIDENT STUDENTS
The education of resident students takes place passively and
actively. The passive educational program includes:
(a) Distributing an acceptable network use brochure during the
check-in process. This brochure contains information on the overview of
the housing network; the fact that housing aggressively enforces its
ISP policies; briefs the student on servers, copyrights, and the
Digital Millennial Copyright Act (DMCA); provides information on the
housing network monitoring and service restriction process; provides
answers to frequently asked questions; and information on how student
computer behavior is a part of the University of Florida Student Code
of Conduct.
(b) The placement of informational stickers by each housing data
port. These informational stickers provide instructions to resident
students on how to register on to the housing network.
(c) The residence hall staff have participated in a training
session prior to student check-in. This training session provides them
basic information to be able to answer many of the student questions
regarding the housing network.
(d) The UF DHNet web site contains all the information regarding
HRE Network Services. Students can read the information prior to their
arrival at the University of Florida to understand what is expected and
necessary when they register on to the housing network.
The active educational program designed by HRE is powered by ICARUS
and supported by the UF DHNet and HRE websites. When Icarus detects
user activity deemed unacceptable by policy, an appropriate series of
actions are performed. In the case of a violation of the HRE P2P
policy, for example, the user in question is sent a notification pop-up
message to their machine, a notification email to their official
University email account, and all the computer systems owned by that
resident are promptly restricted to campus-only network access (Table
2). This restriction is in effect regardless of where the resident
physically goes within the HRE network, preventing abuse by those using
public access ports. Simultaneously, an entry is created in the DHNet
violation system, HAMMER. A snapshot of the user's activity, including
all evidentiary data, is then added to the database, and correlated
with past violations (if any). Residents are required to then visit the
DHNet website in order to restore their access. When the resident
visits the website with any of their computers, the page automatically
recognizes them, and presents the resident with the list of violations.
Instructions are provided for remedying each violation, and then a
violation-dependent policy presentation is provided. Student violators
are then presented with the terms of their restriction. It should be
noted that the time counter for restriction does not officially begin
until they have signed the on-line form with their University ID
(access was still restricted before, however).
Residents who ignore the restriction, and take no action, automatically
have their network access terminated after 10 days.
Similar action scenarios exist for a variety of situations, from
virus/worm quarantining, to the active notification about available
operating system patches, to the active control of malicious activity.
IMPACT OF ICARUS
The impact of Icarus on P2P usage, and more importantly, behavioral
trends, has been immediate and profound. The recidivism rate and first-
offender rates have dropped dramatically, and exhibited a downward
trend, despite an increased number of residents over time, and the
impact of mass quarantines due to Internet worm outbreaks. Furthermore,
fewer residents even attempt to use P2P applications, showing Icarus'
unique ability to sidestep the `P2P arms race' and change students'
perception by consistently integrating comprehensive education with
enforcement (See Table 3).
We are pleased to provide you with this information. Housing
professionals do have a responsibility to educate resident students on
the acceptable use of their computers and the network. There exists
numerous opportunities for students to use technology with legitimate
purposes. Educating students to these purposes is part of our
responsibility and stewardship.
REFERENCES
Haynes, J., & Dunkel, N.W. (pending). P2P resident education in the
United States.
Joachim, D. (2004, February 19). The enforcers. Network Computing, pp.
40-54.
Sherman, Cary, President, RIAA (2004, September 3). College and record
executives tell Congress steps to curtail music piracy. Chronicle
of Higher Education.
Mr. Smith. Thank you, Mr. Dunkel.
Mr. Raduchel.
TESTIMONY OF WILLIAM J. RADUCHEL, CHAIRMAN AND CHIEF EXECUTIVE
OFFICER, RUCKUS NETWORK
Mr. Raduchel. Thank you, Mr. Chairman, Ranking Member
Berman, other Members of the Subcommittee. On behalf of our
employees, investors, content and distribution partners, and
the creative talent to whom we pay royalties, I thank you for
the opportunity to be here today to talk to you about the legal
market for music and media services in campuses.
In the last year, we've seen a marked increase in demand
from institutions. It's gone from trial to adoption. Schools
are buying this as a regular part of their operation. Where the
institutional support has included a blanket purchase agreement
so that all students have access to the service from the
beginning, we've generally been able to get adoption rates over
60 percent, some as high as 85 percent. But where the schools
have chosen instead to tell the students that they must opt in
for the service on an elective basis, the entire industry has
faced significant challenges in getting students to move from
what they call the ``free model.''
Music and movie downloading is not just about an individual
activity. It's also a community activity that is very much
about sharing and expressing preferences with other students.
The experience is therefore a lot richer when all the students
are there from the beginning as part of the community; and less
rich when the students have to join one by one, and the first
students do not see much of a community, obviously, because
there aren't many people there.
As you reported in the report that you read in your initial
remarks, Mr. Chairman, there has been a great increase in the
number of schools.
[Sound of buzzer.]
Mr. Smith. You can ignore that.
Mr. Raduchel. Ignore that? Okay. Our investors have
invested more than $20 million in capital. Our students now
have access to over 1.2 million tracks of music, which is about
what's available legally, and a bouquet of video content that
changes daily. Subscribers can take the music on portable
players, as long as they are the right form. And we just added
an exciting roster of films and TV from Warner Brothers, one of
the members from the MPAA.
So we've been getting support from lots of quarters. We
found a path to let students share both their experience and
their preferences among each other. They want to share their
media with friends. They want to use people as the way to find
media, because in a 1.2 million track library searching for a
title isn't nearly as interesting as seeing what you like, or
the person next to you likes, or your neighbor down the hall.
So we've tried to support that along the line. We've tried to
understand student behavior.
But we all face four major obstacles in the legitimate
services area. Two years ago, our research showed that students
arrived on campus and learned about file sharing in the first
week. It happened very quickly, but it happened on campus.
Today, with much greater penetration of broadband and with
faster computers and bigger hard drives, students frequently
arrive on campus today with their music library already built
up illegally, and frequently with a portable player already
filled with that illegal music. Obviously, that creates a
challenge to start selling them a legal service once they
arrive on campus.
Secondly, as the report you mentioned in your opening
remarks cited, more and more of the file sharing now occurs
within the campus, rather than to the campus from the Internet.
The Hartford Courant had an editorial recently we think we
copied, which was talking about, with anonymous interviews, how
students use DirectConnect, myTunes, Redux, and ourTunes to
copy music on the campus. We attached an editorial from the
Diamondback at the University of Maryland about what students
do there. So the copying has moved onto the campus, and it's
much less, I think, to and from the Internet.
When subscription music libraries number in the thousands
of tracks--and that's what the students have--the only economic
option that's viable is a subscription service for $15 a
semester. That, students can contemplate. Buying 5,000 tracks
is something students are not going to go do. But there are
technological restrictions that make subscription services
feasible [sic].
At one of our schools, the school mistakenly identified us
as the reason that they blocked peer-to-peer with a service
similar to Icarus. Our employees on campus that day had to turn
their teeshirts inside out and leave the campus, because they
were being abused so strongly by other students. The students
do not like restrictions. They want this content, you know, for
free, without restriction; which I guess anybody could want.
But opinion is not yet there.
And finally, as has been discussed at earlier hearings,
there's a lot of complexities about getting content. It's very
hard to explain to a student why a song is only available for
subscription download, is not available for permanent download,
or was available last week but isn't there this week. I
understand all the reasons for it. I've been there. But the
fact is, it makes it very hard to market legitimate services
against all of that complexity.
How can Congress help? I think there are two things that
Congress can do. The first is, I believe Congress should look
at creating a criminal and civil safe harbor for universities
that get legitimate services operating on their campus, against
the copyright liability they share, for the internal copying
that occurs on those networks. This would do two things. This
would reward the universities with immunity that are driving
for legitimate adoption, and it would put on notice the other
institutions that are not.
And secondly, as you discussed, I believe modernizing the
music laws is really critical to making online services
successful. It's just to hard now, and there's too much
complexity in getting it done.
Thank you very much for the opportunity to be here today.
[The prepared statement of Mr. Raduchel follows:]
Prepared Statement of William J. Raduchel
INTRODUCTION
Mr. Chairman, Representative Berman, and Members of the
Subcommittee:
On behalf of Ruckus Network's employees, investors, our content and
distribution partners, and the creative talent to whom we pay
royalties, thank you for the opportunity to speak with you today about
the emerging college and university market for legal online music and
media services. Thank you also for your attention to this marketplace,
because without the subcommittee's vision I'm not sure that campus
leaders and industry would be collaborating so intensively to educate
students about the value of America's creativity, and to promote means
of simultaneously enjoying and respecting creators and their work.
STATE OF THE LEGAL DIGITAL MEDIA MARKETPLACE
Formed in 2003 by two graduate students, Ruckus quickly developed
strong partnerships with media companies of all kinds and attracted top
technical talent to put together an innovative product. Like all
industries that promote and serve transformative dynamics, Ruckus and
our competitors in the industry have hit speed bumps along the path to
success, but in the last year we have seen a marked increase in demand
from institutions. Where institutional support has included a blanket
purchase, we have been able to gain significant adoption, in excess
generally of 60%. However, where schools have chosen an ``opt-in''
model, where the students have to individually adopt and pay for the
service, we, and we understand our competitors, have all faced
significant challenges in moving students away from what they call the
``free'' model.
For this demographic, music and movie downloading is not just an
individual activity: it's a community activity that is very much about
sharing and expressing preferences with other students. To that end,
the experience is much richer when there is critical mass of people
using the service and getting the full benefit of it (e.g.; legal
filesharing and social networking). By definition, we can offer these
services only among subscribers. So it becomes clear that where there's
critical mass--e.g., at blanket purchase schools where it is available
to everyone--there is quicker adoption and therefore a greater
experience because there is a real community behind it.
The good news is growing demand from colleges and universities.
Last year, our industry served tens of colleges and universities, but
mainly on a trial basis. We see more favorable articles about our
industry in the media, and perhaps most importantly, administrators
from schools are calling us to ask for sales information. I think all
of the legal digital media services would agree there has been growing
interest in the market over the past year.
Our investors have invested more than $20 million in capital so far
and will invest more. Our students have access to over 1.2 million
tracks of music and a bouquet of video content that changes daily.
Subscribers can take their music with them on any compatible Microsoft
Plays for Sure subscription music players. We added an exciting roster
of films and TV content from Warner Brothers and a unique partnership
with Audible, offering price breaks on audio books for our subscribers.
In short, there has been significant growth in the content we're
offering our customers.
And Ruckus has found a path--technically--to deliver that content
in a style that is much more in keeping with the way students want it.
Specifically, they want to share their media with friends and use their
friends to find media. When you think for a moment about how
unrealistic it is to search or browse a million plus track library, you
quickly understand why many students prefer searching by people more
than by song. Ruckus customers can send playlists to friends, make
media recommendations, and broadcast to the campus their personal
tastes. This is very motivating for this demographic. Finally, we added
the capability to quickly share music inside the dorm on the university
network--legally.
Today, I believe the industry is making progress in balancing the
needs of consumers with the needs of artists and the respect required
of copyright law. And I believe the marketplace is beginning to realize
the importance of this balance.
However, all legitimate services continue to face major obstacles.
Two years ago, our research showed that students learned about ``file
sharing'' when they arrived on campus. Today, increased broadband
penetration at home and much larger harddrives on ever cheaper
computers means that students frequently arrive on campus with their
music library already built and often a portable player. Persuading
them to change to legitimate service is clearly a greater challenge.
In addition, more and more file sharing now appears to happen
inside the university network where it is very difficult to both detect
and block. The Hartford Courant covered this in depth just a few weeks
ago. Software such as DirectConnect, myTunes Redux and ourTunes allows
students to easily copy music on their campus network. It is this
functionality we recreated legally within our service.
When student music libraries number in the thousands of tracks,
only subscription services seem economically feasible as a legitimate
alternative for students on student budgets. However, the technological
usage restrictions and controls required to make it economically viable
for the music owners are greatly disliked. And our usage restrictions
can have other unfortunate impacts. At one of our schools last year,
when the school mistakenly identified us as the reason for their
separate action to block peer-to-peer services on their network, our
employees had to turn their t-shirts inside out to avoid further verbal
abuse. We have pushed these limits as far as we know how, but we still
cannot support all portable players or allow students to mix or mash
the music. A June 16 editorial (attached) in the University of Maryland
student newspaper complaining about one of our competitors--but in
truth they could have same complaints about us--shows well where much,
maybe most, student opinion lies.
Finally, all legitimate services face constraints and complexity in
obtaining content. It is very difficult to explain to a student why a
song is not available at all or is only available for subscription or
purchase download but not both, or is not available today but was last
week. There are complex legal--or music publishing legal--reasons for
all of these, but they confuse students and encourage them to rely on
illegal sharing. Moreover, there is a lot of so-called gray content (a
recording made by someone at a live concert, for example) that is
unavailable on legitimate services. In fact, Congress recently enacted
severe criminal penalties for sharing prepublication copies of
copyrighted works, precisely the most sought peer-to-peer content.
HOW CAN CONGRESS HELP?
I have been a student, graduate student, teacher and administrator.
After leaving the university, in my business career, I have been on
both sides of the technological progress versus copyright protection
debate. As a citizen, I find it frightening that we are raising a
generation with so little respect for fundamental intellectual property
rights. A friend of mine, a senior university administrator, was widely
attacked on his campus for observing that students who illegally
acquired media were but a small step away from plagiarism, but he was
right.
Congress should consider creating a civil and criminal safeharbor
for colleges and universities for filesharing inside their networks for
those institutions where 80% or more of the students utilize legitimate
music and movie services. No institution can police all of its students
all of the time, but institutions that achieve meaningful adoption of
legitimate services should be rewarded with immunity. At the same time,
those institutions that knowingly tolerate widespread filesharing on
their networks should continue to be on notice that it must stop.
Congress must modernize music licensing laws to make it easier for
services such as ours to offer students legally what they want. Your
hearings have demonstrated this need; it is now time to legislate a
solution. And device interoperability, as you know, remains an obstacle
for legal digital media subscription services to compete effectively.
On behalf of Ruckus and the many other stakeholders in our
industry, we want to express our appreciation to the Committee for your
determination to allow legal digital media services to compete fairly
in the marketplace.
Thank you.
ATTACHMENT
Mr. Smith. All right. Thank you, Mr. Raduchel.
Before I begin my questions, let me announce--because it
will indicate to our witnesses and to the audience how serious
we are about trying to reduce piracy on campuses--and that is
that in the next few days Mr. Berman and I will be signing a
letter to the Government Accounting Office asking them to
conduct a study of all the major universities and colleges in
the United States; and not just studying to see what their
progress or lack of progress has been in regard to reducing
this piracy, but I actually want them to rate the colleges and
universities.
I don't know if it will be a letter-grade or if it will be
a word rating. But I want to move forward with that, so that we
can increase the scrutiny and increase the public attention to
the piracy that occurs on campuses today.
As I mentioned earlier, we're making progress, but I want
to quantify that progress over the course of the next several
months.
Mr. Updegrove, let me direct my first question to you. And
this really is a follow-up on our earlier conversation before
the hearing began. I had asked you if the University of Texas
was able to sort of quantify their progress. You said it had
been modest, but at the same time successful. And would you
elaborate a little bit on how the University of Texas imposes
sanctions? You mentioned the one, two, and three strikes. And
just very quickly describe that to us.
Mr. Updegrove. We have a three-strikes policy at UT. In the
case of a first offense, a permanent record in the student
judicial services; in the case of a second offense, service to
the network is automatically disconnected and an in-person
visit is required with student judicial services. And frankly,
we have never had a third offense. We've had only 8 second
offenses in the last 14 months.
Mr. Smith. It sounds to me that would not be modest
progress; it would be substantive progress, if you've had no
third infractions.
Mr. Updegrove. Well, I should confess that when I talk to
my colleagues around the country, third offenses are very, very
rare. We believe that there is a prevailing sense that file
sharing on the Internet is anonymous, voluminous, and therefore
safe. And I think it comes as quite a surprise to people who've
been doing it when their identity is revealed and when it's
clear that the Internet is not--the Internet, properly managed,
is not an anonymous haven for this kind of behavior.
Mr. Smith. A quick follow-up question. Are you satisfied
with the progress that you're making at UT? Or would you
consider an Icarus type program? Or do you think you've got
sort of what you need in place that over time is going to yield
the results we want?
Mr. Updegrove. We think that we have an appropriate balance
between controlling the costs of network provision, the
behavior on the network, and respect for the privacy of our
users. I mean, we think we could eliminate student parking
tickets if we banned cars, but we don't think that we want to
go that far. We think that an education program, a very well-
enforced policy, and bandwidth management takes us as far as we
wish to go.
Mr. Smith. Okay. Very good. Thank you.
Mr. Taylor, you made it clear what you want universities
and college officials to do, as well as students to do. Would
you elaborate a little bit more on what MPAA itself is doing,
both in regard to bringing lawsuits, and so forth?
Mr. Taylor. Well, as Members of this Subcommittee are
aware, we have begun a number of actions against both end-
users, individual end-users, as well as entities who are
building business models around providing unauthorized access
to our copyrighted works. We'll continue to enforce these every
step of the way. As I mentioned earlier, we're also looking for
better ways to protect our works in technological means, to
make it more difficult to rampantly borrow, steal, our
material.
But I think it's also worth noting--and I neglected to in
my opening remarks--to say that we recognize that by the time
students get to the university campus there are some behaviors
that are, unfortunately, well ingrained with regards to illegal
activity online.
So part of what we're trying to do at the MPAA is work with
respected educational organizations to reach kids at an earlier
age, trying to modify behavior before they get to the college
campus. We're working with ``Wired Kids,'' for example, a well
known Internet safety organization which now includes piracy as
what they call their four ``Ps'' of concern in Internet safety:
privacy, pornography, predators, and piracy. They all go
together.
And we're also working, we'll have an announcement shortly
with a nationally known education in-school organization to
help bring this topic to the forefront for principals,
students, teachers, and parents of younger children.
Mr. Smith. Mr. Dunkel testified a minute ago that you can
download a movie now in 6 seconds. Have you seen an increase or
decrease in the illegal downloading of movies just in the last
few months? I mean, is there any trend that's evident yet?
Mr. Taylor. Well--Well, we have this summer. Thankfully,
when folks are not on campus there is a down-tick in the levels
we're seeing. We've also adopted increased ability in our
ability, however, to monitor the landscape. And we are getting
regular reports, and we're about to have a new report
internally that we'll be evaluating. But sadly, the trending is
up. We're monitoring that landscape very regularly and
prioritizing which institutions to go to accordingly.
Mr. Smith. You'll be able to compare this fall, say, to
last spring. How does last spring compare to the fall before
that? Do you know?
Mr. Taylor. Sadly, it's on the uprise. As it becomes faster
and easier to do, unfortunately, the behavior continues.
Mr. Smith. A lot of work to do.
Mr. Taylor. Indeed.
Mr. Smith. Okay. Very good.
Mr. Dunkel, let me squeeze in a last question for you. I
happen to think Icarus is a great technological solution. And
either you or your colleague who is here, who developed it, can
respond to this question. And that is, it seems like such a
great solution; why is it more colleges and universities are
not using it? Is it just limited to the University of Florida,
or is it more widespread use than that?
Mr. Dunkel. Certainly. It has everything to do with where
the product is in the pipeline, and the availability to private
and public entities. The company currently is identifying the
last of two Beta sites, and we're finalizing venture capital
for implementation teams on those sites. So within about 30 to
60 days after those sites have been able to use the Beta, then
we'll make that product available. So within a handful of
months, it'll be available to the open market.
Mr. Smith. But it's just not available now.
Mr. Dunkel. Right.
Mr. Smith. Authority is almost experimental, then?
Mr. Dunkel. Correct.
Mr. Smith. Okay. And you would expect widespread use, or at
least greater use?
Mr. Dunkel. We've had over 200 institutions express a
strong interest in the product.
Mr. Smith. Wonderful. I'm not endorsing it. I can't do
that. But it sounds like a great product to me. Thank you all.
Mr. Berman is recognized for his questions.
Mr. Berman. Thank you very much, Mr. Chairman.
I wanted to just make sure I understand. It's Mr. Raduchel?
I thought I heard you say during your testimony or in response
to a question that these days, in terms of college students,
most of the music they're obtaining illegally is coming from
the universities' own internal networks, rather than the
Internet. Did I hear you right?
Mr. Raduchel. Correct.
Mr. Berman. Thank you. You also mentioned that where
institutional support included a blanket purchase, we have been
able to gain significant adoption, in excess generally of 60
percent.
Mr. Raduchel. Sharing is a community experience. So if you
don't have everybody in the group, coming in and selling just
one service, you can't share any of that music. But if
everybody is in the group, then the kids can share the music
among themselves.
Mr. Berman. I'm curious why it's only 60 percent in that
situation.
Mr. Raduchel. Well, this is where it----
Mr. Berman. It doesn't cost them, right?
Mr. Raduchel. It doesn't cost them. We've gotten as high as
85, at a school were the president committed to ethics and
said, ``I want my students to be ethical.'' But some kids
cannot be weeded away from illegal, or they've already built
up--they've already got their libraries. Freshmen are easier to
switch than seniors. But we haven't been able to get above 60
to 70 percent, in general.
Mr. Berman. Okay. Mr. Updegrove, what can Internet2 do to
prevent the network from being hijacked by pirate services like
i2Hub?
Mr. Updegrove. Internet2 is a passive transport, and the
end component of Internet2 are the 207 institutions. And so I
think it's incumbent upon all of us who share the benefits of
Internet2 to adopt the four-part strategies that were outlined
here: education; bandwidth management; strong policy
enforcement; and when appropriate, offering a sound commercial
alternative.
Mr. Berman. And that implementation will deter or prevent
the hijacking?
Mr. Updegrove. Prevention is a difficult challenge, as I'm
sure you know, Congressman. The Internet protocols are open.
There's an enormous amount of technical innovation occurring
monthly, weekly, and daily on the Internet. There is, frankly,
a worldwide ``whack-a-mole'' challenge going on, with new
protections built one day and new work-arounds built the next.
So it's difficult for us to guarantee that we can prohibit
illegal behavior. But we're all committed to working on it.
Mr. Berman. Mr. Dunkel, you mentioned that using the Icarus
program has saved the University of Florida money in the long
run. Would it be difficult or costly for other universities to
implement Icarus on their campuses?
Mr. Dunkel. It would not. First of all, it saved the
University of Florida about a half a million dollars in
unnecessary infrastructure improvements. It saved our
operation----
Mr. Berman. Because of the reduction of band using?
Mr. Dunkel. Right. Absolutely. It saved our operation about
$2 million. We were able to delay our infrastructure
improvements and, during that delay, the cost of that equipment
came down $2 million. That was important.
This is a very easy application for other institutions.
It's an application where institutions do not have to buy
additional equipment. It can be installed on the equipment that
they currently have.
Mr. Berman. Thank you. And once again, Mr. Raduchel, your
testimony points to issues such as the complex music licensing
scheme--ah, yes--as one of the barriers to entry with students.
We're working on that, sort of. And what are some of the
impediments to providing students with access to movies?
Mr. Raduchel. Movies, we just did a deal with Warner
Brothers which was truly revolutionary in terms of the pricing,
giving students, you know, access to movies. But we have to
be--the windows that exist, of course, for movie release force
us to 3- and 4-year-old movies, rather than current titles.
Again, it's trying to match--we're competing against free. So
$20 a semester is all we think we can charge students and get
widespread adoption.
So now we have to get the movie industry to believe that
$20 a semester, shared with them and with all the other costs
along the way, makes for an attractive proposition. We got one
studio to go along and believe that that's important, to try to
get students attached and attracted to having subscription-
based movies. But that's certainly--I mean, the movie industry
licensing, as you know, is complex, as music.
Mr. Berman. Thank you very much. Thank you.
Mr. Smith. All right. Thank you, Mr. Berman.
The gentleman from California, Mr. Issa, is recognized for
his questions.
Mr. Issa. Thank you. Mr. Raduchel, I guess, if I heard you
correctly, you're trying to compete with free. Because you're
saying that when the students have to opt in and pay, they
don't choose it; and when the university absorbs substantially
the cost, 60 percent participate. Did I hear that right?
Mr. Raduchel. Roughly, yes.
Mr. Issa. Okay. One of my challenges is, I don't think that
you compete with free and just shift the cost to somebody else,
whether it's the university or not. Because in real life,
students are going to leave and it's not going to be free any
more. So that's one of the challenges that this Member faces.
The other one, I guess, is, although I would love to have a
$20-a-quarter, or a $50- or $60-a-year annual cost of unlimited
movies, it's not very American to say that the value of ``Star
Wars''--which, by the way, cost me $2.50 in Russia--in Russian.
I know you haven't released it in DVD yet, but it is available.
And I think I paid retail. You know, I don't want to tell them
what the price is.
So I guess Mr. Taylor, representing the studios, is there a
number that we're starting to get to for subscription that
could provide substantially all of the catalogue--the backlot
catalogue, if you will, not the recent releases, but sort of
the basis of everything that's ever been on TV? Is that
something that is foreseeable, as you see it, coming out of the
industry? And I guess I'd direct it to both of you, because one
is a buyer and one represents----
Mr. Raduchel. That is what Warner Brothers gave us. So the
backlog of titles we have available at a very attractive price.
So that they do have--you know, there is that. New movies, cost
money. New movies, you're going to have to pay on a pay-per-
view basis.
Mr. Issa. Right. But that's one large studio--and granted,
a large library. But I guess, do you expect to see several
other major studios able to bring that together to where you'd
have the entire library.
Mr. Raduchel. We're talking to a second big one now. And we
hope, if we get that one, we can get a third, and to get more
people onboard.
I want to say that in most of the blanket-purchase schools,
the student government has agreed to the charge. So there is a
charge. It is a collective charge. But it has been done with
the students' support. And so that does go into the student
fees. So there is an increase in fees that the students see,
and they do vote for it.
This is not something that's been imposed, in general, by
the administration. So when I talk about blanket purchase, it's
because the students have agreed to go along that way.
Mr. Issa. I guess I'll follow up before I go to Mr. Taylor.
When you have--I don't know--nine libraries put together, if
Warner Brothers were the model----
Mr. Raduchel. Right.
Mr. Issa.--and their contract with you is none of my
business, but if you were to look at it, the unsubsidized
amount, the amount to the public--because although today it's
dealing to a great extent with universities and peer-to-peer,
ultimately the question is if everybody that wants to be able
to both have movies to see, download, and put on their Digix
players--which are now going to be very available for Christmas
and so on--wanted it, what is the subscription fee that you
think we would get to? You know, sort of forecasting your
business model to the entire United States.
Mr. Raduchel. In range, I would say $10 a month for back
title. The rates we pay are approximately the same rates that a
broadcast television station would pay per head for putting a
movie up to be seen over broadcast television. So it's not that
we're way off scale. I mean, we're paying roughly the same that
a broadcast television station would pay for that same movie.
Mr. Issa. Okay. Mr. Taylor, how do you view this emerging
technology, particularly as it gets past the university?
Mr. Taylor. Well, I would just note that, as a for-profit
enterprise, you know, the MPAA member companies have every
incentive in the world to provide and take advantage of these
new digital delivery means. And I know our member companies are
committed to developing new delivery systems and taking
advantage of those that are emerging.
That said, like with any business enterprise, we have to
make sure they can operate in a secure environment. So they're
making, you know, business decisions studio by studio. We just
heard about Warner Brothers' recent development. I have no
doubt our other member companies are looking at the landscape
and figuring out how best to take advantage of it.
The name of the game, when we make a movie in Hollywood, we
don't make it just to show on the studio lot. The more folks
who can see it, paying a fair and reasonable price, obviously,
the better. So we're as excited as anyone by the new
technologies that are emerging. And that's one reason we've
established things like Movie Labs and joined up with
Internet2, so that we can be at the forefront of that movement.
Mr. Issa. Okay. And just one follow-up, and this can be
done for the record. I mentioned the Digix products that are
coming out, players, en masse for Christmas. I mean, this is
going to be the first year in which there will be--every
Circuit City, every Best Buy, and loads of others will all have
a large amount of hand-held products. Do you, Mr. Taylor, think
that any of these models are arriving just in time to
facilitate the legitimate use of these products? Or are they
going to take you where MP3 players such as the iPods and so on
took the industry of music?
Mr. Taylor. We'll put on our optimistic hat, and know that
as we continue to work very hard to secure our works and
identify business models as an industry that can work, these
are the type of devices as they come on, provided they respect
those protections, that can be a great benefit not just to the
industry but to the consumer.
I can look back in recent history at the DVD model. The
film industry was the leader in the development of the DVD. And
there are reasonable content protections on those discs, each
of those discs.
And when people hear the term ``content protection,'' a lot
of, you know, people's hair stand up. But what did the content
protection do? It unleashed an avalanche of titles into the
marketplace; it provided a DVD player that respects those
protections; and it led to the most successful new product
introduced in the consumer electronics enterprise.
And most of all, most importantly, consumers were the great
beneficiary of those reasonable protections, because now
they're building personal libraries of their favorite films
like never before. So reasonable protections, new technologies:
When those go together, good things happen. And we'll be
leading that charge.
Mr. Issa. Thank you, Mr. Chairman.
Mr. Smith. Thank you, Mr. Issa.
The gentlewoman from California, Ms. Sanchez, is recognized
for her questions.
Ms. Sanchez. Thank you, Mr. Chairman.
Mr. Taylor, one of the concerns that I have with the
various subscription services is the impact that they have on
the revenues for the creators. And I'm going to give you an
example. Yesterday I had some songwriters come visit me in the
office that were talking about subscription services that allow
people unlimited access to download songs for as little as $5
or $10 a month. And they saw that as a big threat to their
income stream. And I know that the business model for the
motion picture industry is somewhat different, but I'm
wondering if there's been any discussion of any types of
safeguards that you might put into place to try to protect the
creative talent and their revenue as you move forward, in terms
of the new technology and the subscription services.
Mr. Taylor. Right. Well, in Hollywood, each of the segments
of the creative community--writers, actors, directors, grips,
all of them--are represented, and through negotiations these
terms are worked out. And as new means of delivery come into
the marketplace, when next windows for negotiation take place,
those are the type of things that we've worked out in that
environment.
Suffice to say, we're an industry that has had a long and
productive and fruitful relationship with all elements of our
creative talent. And one of the reasons that I consider it such
an honor to testify on this subject today is it's not just
about the names on the marquee that we stand here trying to
speak about and protect. It's those names that scroll and
continue to scroll as you walk out of a theater, get in your
car, and drive out of the garage at the movie theater.
All of those folks have a stake in this fight, and they're
the ones who are really, truly on the front lines of it. So we
are most interested, and very interested, in making sure that
everyone in our industry is well taken care of and protected.
And it begins by making sure that there is some compensation
for the works that are available and made.
Ms. Sanchez. But I mean, have you had meetings with folks,
you know, from beginning to end of production that contribute
to this process? It seems to me, and this is sort of a follow-
up question for--Mr Raduchel; is that correct? You know, who
sets the, you know, $20-a-semester, you know, subscription, I
mean, for an entire catalogue of movies? Call me crazy, but
that seems like--you know, for all the people and all the work
that goes into producing these works--very little.
Mr. Raduchel. They only get access to a limited number on
any given day. It's 50 titles on any given day, and we cycle
through the titles over the course of the semester, the course
of the month. So it isn't everything.
You know, you have very good questions. I cannot disagree
with them at all. The issue that we're trying to do, and the
industry is supporting us on, is getting kids to agree to pay
anything. And the step one is to get them habituated to paying.
And the belief is that if they're habituated to paying
something, as they get older, have more money, go on in life,
they will be willing to pay more.
That is the theory. It may be right; it may be wrong. But
if kids come out of college habituated to paying nothing,
unfortunately, a 24-year-old is not a lot different than a 22-
year-old or an 18-year-old, and this habituation to free will
go on and persist in life. And I think that threatens all of
the creative talent.
I mean, we care a lot about the creative talent. I mean, we
want them to earn money. That's what we're trying to go do. But
we are competing against free in a very broad catalogue, and so
there's a limit to what pricing we can charge and expect we're
going to get any adoption at all. But your points are very
valid, and I understand them.
Ms. Sanchez. All right. No further questions, Mr. Chairman.
Mr. Smith. Okay. The gentleman from South Carolina, Mr.
Inglis. Do you have any questions?
Mr. Inglis. No questions.
Mr. Smith. Okay. Thank you. Are there any other questions
by any other Members who are present?
Mr. Berman. Mr. Chairman?
Mr. Smith. The gentleman from California.
Mr. Berman. Just to ask if the record could remain open. I
think the gentleman from California, Mr. Schiff, wants an
opportunity to put in a written statement on this issue.
Mr. Smith. Okay. Without objection, his written statement
as well as the opening statements of any other Member will be
made a part of the record.
Thank you all very much. This has been very informative.
And this is going to be one of those hearings which lives on,
so to speak. We've had hearings on this subject before; we will
have hearings on this subject in the future. I mentioned the
GAO report that we will be requesting in the next few days. And
so we'll continue to monitor the progress, and you all have
been a big part of the progress that has occurred so far. So
thank you for your input, and thank you for your testimony.
[Whereupon, at 10:15 a.m., the Subcommittee was adjourned.]
A P P E N D I X
----------
Material Submitted for the Hearing Record
Prepared Statement of the Honorable Howard L. Berman, a Representative
in Congress from the State of California, and Ranking Member,
Subcommittee on Courts, the Internet, and Intellectual Property
Mr. Chairman,
Thank you for scheduling this hearing on campus university Peer-to-
Peer piracy. The beginning of the academic year is the perfect time to
assess what progress has been made by universities to stem the
proliferation of illegal file-sharing by students on their campuses.
There is little question of the devastating impact piracy has had
on the entertainment industry. The total value for the music industry
at retail declined from $14.5 billion in 1999 to $12.1 billion in 2004.
In March 2005 alone, 243 million songs were downloaded from illicit
peer-to-peer services. (NPD Musicwatch). Furthermore, it is estimated
that approximately 400, 000 films are illegally downloaded every day.
However, when it comes to downloading content that is not paid for,
there seems to be a disconnect that students exhibit between
intellectual knowledge and actual behavior. There was a very telling
discussion that occurred during a program about P2P file sharing
organized by my colleagues, Adam Schiff and Linda Sanchez, and me for
students from different colleges who were interning on the Hill. The
students all acknowledged that downloading content from P2P networks
was possibly morally wrong, probably legally wrong and potentially
harmful to their own networks (from spyware or adware). Yet many of
them continue to use P2P file sharing as a means of obtaining music,
movies, television shows and games.
Last year at this hearing, Graham Spanier, one of the chairs of the
joint committee and a visionary in undertaking the Lion's Share project
at Penn State testified ``I don't think there is any one part of the
solution. It has to be a set of variables that universities use to
bring about progress in this area.''
Awareness of the effects and solutions to the piracy problem can be
addressed through:
Education
Enforcement
Technological improvements and
Affordable legitimate alternatives.
The good news, in no particular order, is that there has been
progress on every front. This past June, the Supreme Court, in a
unanimous 9-0 opinion in the Grokster case, sent a clear message that
companies that encourage theft can be held liable. Immediately after
the decision, iMesh, one of the original peer-to-peer (P2P) services
announced the transition from a free to commercial-based authorized P2P
business model which ensures compensation to creators. Slowly others
have begun to follow suit. As late as this week, Grokster is rumored to
be attempting to turn ``legit.''
Since the Grokster decision, there have been other positive impacts
on campuses around the country, for example, the University of
California and California State University announced a deal with Cdigix
Inc. which provides administrators at all 13 UC and 23 Cal State
campuses the option of offering online music and movie sales to
students. Of course, providing students with legitimate alternatives to
the Kazaas and Groksters is a key part to any solution to the piracy
problem.
But as the report released yesterday by the Joint Committee of
Higher Education and Entertainment Communities indicates, there are
miles to go before we sleep. Free is still an option and while the
Grokster decision may have stemmed the wave of piracy, many continue to
ride the wave and persist in illegally downloading music, movies, and
software.
We must confront the piracy which takes place on the school's local
area networks (LANs) and the increased use of unauthorized hacks of the
legitimate online services. We cannot afford to become complacent about
ensuring that the creators receive just compensation for the works that
students enjoy.
Just this Monday the movie industry announced a concerted effort
dedicated to mitigating the effects of piracy. The goal of the new non-
profit research and development company, Motion Picture Laboratories,
Inc. (Movielabs), will be to create new technologies to protect the
distribution of films and other works as well as to protect against
electronic theft, particularly on the Internet. Just last week RIAA and
MPAA joined Internet 2 as corporate members with the objective of
working together on new technologies for secure digital distribution.
We must continue to work together to help address the piracy problem.
It is the combination of the many methods and not just one silver
bullet that will address the campus peer to peer issue. Perhaps, as
more simply put by Aristotle, ``in educating the young we use pleasure
and pain as rudders to steer their course'' (Nichomachean Ethics, Book
X.) The Universities and content providers must educate well, as it is
this future generation which will educate the next.
I am looking forward to hearing from the witnesses and learning
about some of the remaining pitfalls to curbing piracy on campuses.
I yield back.
__________
Prepared Statement of the Honorable John Conyers, Jr., a Representative
in Congress from the State of Michigan, and Member, Subcommittee on
Courts, the Internet, and Intellectual Property
According to a March 2005 PEW Internet & American Life Project
survey, young adults continue to be the largest group of Internet users
who share files with others online. File sharing among students can
provide many beneficial uses in education, research, and professional
development. Unfortunately, college students have exploited the
intended use of the peer-to-peer network by trafficking in music,
movies, software, video games, and other copyrighted material without
permission. While the Supreme Court unanimously held this past summer
in the Grokster case that the file trading companies can be liable for
their misconduct, we cannot turn a blind eye to the users of such
software.
Aside from the issue of copyright infringement, this illegal use of
peer-to-peer networks can lead to invasions of student privacy,
viruses, and other potential security threats to the university's
network.
The content industry is stepping up its battle against digital
copyright piracy on college campuses, encouraging higher education
leaders to monitor their students and impose restrictions on violators.
On the other hand, monitoring raises privacy concerns and could chill
the use of peer-to-peer technology that can otherwise have valuable
academic rewards. I also would be concerned that monitoring could turn
university officials into spies, thus creating an atmosphere in which
the First Amendment and privacy rights of students are significantly
devalued.
Because piracy has proven to be a lethal threat to the content
industries, we must address the legitimate concerns of creators. One
approach to reducing peer-to-peer piracy on university campuses that
does not require monitoring seems to be working: providing a legal
alternative for students to access music, films, and other media while
educating students about the importance of copyright issues. Two major
universities in my home state, the University of Michigan and Michigan
State University, have taken the lead in this approach.
After the University of Michigan inked an agreement with Cdigix,
students were able to choose from a wide variety of media and
entertainment services for only a nominal monthly fee. Because of the
University's agreement with Cdigix, its acceptable use policy, and its
education campaigns on copyright infringement, the Recording Industry
Association of America cited the University as a model for how
universities should combat illegal file sharing.
At Michigan State University, the University has implemented the
multi-tiered approach of information campaigns, an acceptable use
policy, and technical measures to prevent illegal file sharing. These
measures have led to a 75% reduction in the monthly rate of Digital
Millennium Copyright Act violations on campus. In addition, MSU is
conducting advanced discussions with venders such as Cdigix to provide
a legal avenue for students to access digital entertainment. MSU's
strategy strikes the appropriate balance between preventing illegal
sharing of copyrighted files and respecting the privacy of personal
communications over the University network.
By providing legal alternatives to file sharing and through
education, universities can and will continue to teach students to make
good decisions regarding online entertainment. Furthermore, by becoming
familiar with services like Cdigix, students will develop the habit of
paying for music that will extend beyond the university setting.
__________
Prepared Statement of the Honorable Adam B. Schiff, a Representative in
Congress from the State of California, and Member, Subcommittee on
Courts, the Internet, and Intellectual Property
I'd like to thank Chairman Smith and Ranking Member Berman for
convening this important hearing. The testimony we will receive today
demonstrates that peer-to-peer piracy is still out of control, posing a
serious threat to the livelihood of copyright creators, many of whom
live in my district.
According to some estimates, over 60 percent of all Internet
traffic in the U.S. can be attributed to peer-to-peer usage. Over
ninety percent of all content on peer-to-peer networks consisting of
unauthorized copyrighted files, and an estimated 400,000 films are
illegally downloaded every day. Given the prevalence of high speed
Internet connections at universities across the country, peer-to-peer
piracy of music, television shows, and movies has reached epidemic
levels at many institutions.
A few months ago, Ranking Member Berman, Rep. Linda Sanchez, and I
hosted a panel discussion for House interns regarding piracy on campus
and the availability of legitimate online entertainment choices that
are available. At the event, many students acknowledged the continued
prevalence of illegally downloading music and movies via peer-to-peer
networks on campus.
A number of universities have taken important steps to address this
problem. In particular, the University of Florida, with its innovative
program targeting unapproved peer-to-peer applications and prohibiting
transmission. It is encouraging to hear that this program has
reportedly kept the network free from illegal copyright sharing, while
faculty and students remain able to share and distribute academic
material through secure websites, FTP, and e-mail. This model should
serve as an example for other institutions to follow.
Universities in my home state of California have exhibited mixed
results. Some campuses in the California system have already worked
diligently to address the problem of piracy on campus. I'm pleased to
hear that the University of California in collaboration with the
California State University system has recently contracted with a
number of online entertainment providers to offer discounted
subscriptions for music, movies, and other digital entertainment to
students. I strongly encourage each of the individual campuses within
the system to review the details of the various offerings and work to
make one or more of the services available as soon as possible.
In closing, I'm pleased to learn that this will not be the last
hearing on this topic and that the Subcommittee will continue to
monitor progress in this area. With the proliferation of new peer-to-
peer systems such as i2Hub and ``local area networks'' (or ``LANs''),
we must continue our vigilant oversight in this area and determine
whether a greater degree of congressional intervention is necessary.
__________
Prepared Statement of Frederic Hirsch, Senior Vice President,
Intellectual Property Enforcement, Entertainment Software Association
(ESA)
On behalf of the Entertainment Software Association (ESA) and our
member companies, I thank you for this opportunity to add a statement
to the record to update you on the impact peer-to-peer (P2P) piracy on
university networks is having on the entertainment software industry.
In the three years since our President, Douglas Lowenstein, appeared on
Chairman Smith's University P2P Piracy Panel at the University of Texas
at Austin, our industry has taken a number of significant steps to
combat the piracy problem on American college campuses. Nevertheless,
campus P2P piracy remains a threat to the economic contributions the
computer and video game industry makes to the United States economy.
As ESA's Senior Anti-Piracy Executive, I would like to update you
on the progress we have made in addressing college-level P2P piracy
over the past few years on the educational and enforcement fronts. In
addition, I would like to review the growing challenges we face,
including the rapidly increasing use of BitTorrent for infringing
activities, as well as to highlight what universities need to continue
to do to help reduce the P2P piracy threat on the nation's campuses.
As you may know, the ESA is the trade association serving the
public affairs needs of the world's leading publishers of video and
computer games, including games for video game consoles, personal
computers, handheld devices, and the Internet. ESA members produced
more than 90 percent of the $7.3 billion in entertainment software sold
in the U.S. in 2004. In addition, ESA's member companies produce
billions more in exports of American-made entertainment software,
driving the $25 billion global game software market. Entertainment
Software is a vibrant and growing segment of the American economy,
providing highly skilled jobs and ever-increasing exports.
Entertainment software companies invest significant amounts of
capital in each of their games and the intellectual property that these
represent. Developing and launching a top game often requires a team of
more than 100 professionals working for more than three yearst, with
development and marketing costs often running at least $5 million and
often $10 million and higher. As with any hit-based industry, only a
small percentage of these titles actually achieve profitability.
Nonetheless, the demands of the game-playing market compel ESA members
to continue to work even harder to develop faster and more exciting
games, requiring larger investments in the programming and technology
that will produce the effects and challenges that game players seek.
The new generation of game consoles that will be launched over the next
six to nine months will require game publishers to make even more
significant levels of investment as the processing power of these new
machines will permit more complex and realistic game design, further
enhancing the game-playing experience for consumers.
Over the past few years, illegal and unauthorized uses of game
software have proliferated rapidly, as the popularity of playing
interactive games has commanded an increasing share of Americans'
leisure-time activity. Among certain segments of the population,
notably college students, the playing of games represents a dominant
form of recreation and entertainment, increasingly displacing other
forms of diversion such as watching television. The current generations
of college students have been playing computer and video games for more
than a decade. A Pew study in 2003 revealed that over 65% of college
students play interactive games on a regular or occasional basis. Most
of them bring to their college campuses the game-playing habits
cultivated over many years at home. Thus, it is easy to understand why
college campuses continue to be areas of major concern for ESA members,
particularly as college students, open and eager to learn and try new
things, often fall prey to the temptations of easy access to hundreds
of free interactive games over the Internet.
A digital file containing an interactive game consists of, on
average, over 650 megabytes of information, a large digital file over
150 times the size of the standard music mp3 file. Downloading such a
file over a dial-up connection where the speed of the connection is 56
kilobits per second is a daunting proposition at best and, at more than
24 hours, practically unfeasible for all but the most determined of
downloaders. Despite the dramatic increase in broadband access to the
Internet among American households, most American homes access the
Internet through dial-up connections. Thus, most students, when they
first arrive at college, have not had any experience downloading
interactive games. However, the broadband systems that exist on most
American college campuses offer a dramatically different technological
context for the average student, who becomes quickly informed about the
many wonderful ``facilities'' of high-capacity access to the Internet.
Indeed, in such a broadband environment, the download time for a full
game file can be cut to 3-4 hours and sometimes faster, a much more
enticing opportunity than what these students might have found on their
home computers. ESA's tracking of online pirate activity confirms that
almost all illegal game downloads occur over broadband connections.
The high-speed access offered by such campus broadband systems
become problematic when combined with other personal and lifestyle
elements found among many student communities: substantial amounts of
free time, high levels of technical knowledge and attraction to
interactive games, and a close community with a generally high
percentage of active game players. On many campuses, this congruence of
factors produces environments marked by high rates of illegal copying
and distribution of game software. Moreover, the efficiency of peer-to-
peer software and networks offering a wide variety of illegal versions
of games makes downloads of game software all the more accessible to
the average college student. Indeed, ESA's monitoring of Internet
piracy of its members' leading games shows that the overwhelming
majority of illegal downloads (89%) of such games on college systems
are executed through P2P protocols.
ESA plays a significant enforcement role on behalf of its members
by pursuing efforts to reduce the illegal uses of its members' game
software. Needless to say, much of ESA's anti-piracy work has been
focused on addressing pirate activity on the Internet. The online
enforcement program begins with our automated monitoring of the
Internet, which detects and identifies infringing activity and sites
involving game product. Such detection is followed by ESA's manual
verification of the infringing activity and transmittal of notices
advising ISPs and MIS managers of the illegal activity detected among
users of their systems and requesting their intervention in procuring
the termination of such activity. Over the past year, ESA has sent over
173,000 such notices. The ISPs responses to these notices run the gamut
of no response, to an automated acknowledgement of receipt of the
notice, to an e-mail response, to a phone call or letter describing the
action to be taken in response to the notice. Unfortunately, the vast
majority of responses sent to ISPs regarding P2P activity fall into the
no-response category.
The good news is that college and university MIS administrators
have distinguished themselves from the large group of non-responsive
ISPs with a high level of response and cooperation in response to our
notices. Their responses are generally very informative and go beyond
what we normally receive from commercial ISPs in terms of describing
their efforts after receiving the notice of infringing activity. Some
colleges, notably the University of Oklahoma and Webster University,
routinely describe to us in detail the steps they have taken to address
the instance of piracy identified in each of the notices we send them.
Such steps can range from warning letters to suspension of access to
the university network. We have been very encouraged by this level of
response and have used the opportunity of our contacts with university
administrators to offer them additional support and information that we
encounter with respect to game piracy.
Fortunately, universities and colleges across the United States
have done more than merely respond to our notices regarding pirate
files appearing on their systems. Many of them have taken a pro-active
approach to educate their students, faculty and employees about online
piracy and have adopted policies governing the use of their systems and
networks aimed at establishing clear lines regarding the consequences
of students, faculty or employees engaging in illegal copying or
transmissions of IP-protected content. We think that these educational
efforts are among the most important areas of activity for university
administrations. Such educational initiatives over time will do much to
dissipate the ``anything goes'' attitude that permeates many college
campuses with respect to Internet usage. Addressing the ethical and
legal aspects of infringing activity and abuse of intellectual property
is an important function that we think college administrations are
ideally suited to perform. We also think that a continuing dialogue
between IP industries and college administrations regarding the way
these issues are raised and presented to students could serve to
further enhance colleges' efforts to educate students about
intellectual property abuse and piracy.
We are also aware that many universities have instituted
technological measures to reduce the illegal activity resident on their
networks. Whether it is the ICARUS system implemented by the University
of Florida, the Quarantine Approach initiated by UCLA, or Audible
Magic's CopySense, or bandwidth-shaping technologies that limit the
amount of data that can be sent over networks, many colleges have
availed themselves of technological solutions that serve to either
preempt or deter the use of their systems for illegal transmissions of
infringing files. In addition, the University of Nevada has installed
technology that automatically deletes files saved to communal computers
when switched off making it impossible to store illegal files there. We
applaud such efforts and believe that wider application of such
technologies will ultimately help preserve the college networks for the
educational uses which should be their paramount purposes.
Enforcement, education and technology are all critical elements in
the effort to reduce piracy on university systems. We think that many
universities have stepped up to take on the challenges that this
Subcommittee set forth for them last year by taking a pro-active and
engaged approach to this problem. While the ESA and its members are
gratified by the level of response and communication that we have seen
from universities with respect to instances of game piracy found on
their systems, we must also point out and caution that Internet piracy
is a dynamic and rapidly evolving phenomenon, raising new concerns and
issues for those trying to confront it effectively. P2P technologies
are changing quickly, and some, such as BitTorrent, have set new
benchmarks for the speed and efficiency with which they permit the
copying and distribution of digital content. The constant change we see
in the pirate Internet environment requires continuing dialogue between
the IP industries and university administrators to coordinate and
collaborate on the best way to respond to these new challenges.
In addition to the problem of P2P piracy, ESA members remain
equally concerned about another form of illegal activity occurring on
some university systems, beyond the knowledge and awareness of their
administrators. Federal investigations and enforcement actions against
members of Internet piracy rings known as ``warez groups'' over the
past few years have revealed that many members of these groups have
surreptitiously used university systems to store their illegal
``warez'' files, consisting of illegal digital copies of games, movies,
software and music. Some of these were cases of intrusion, where one or
more members of these groups successfully hacked into a university
system and then undertook to quietly hide several thousand files beyond
the purview of system administrators. Other cases were ``inside jobs'',
in which a member of the university MIS staff was also a member of one
of these groups or was co-opted into permitting the groups' use of
university servers and bandwidth capacity for their illegal purposes.
While we understand that such activities were in no way sanctioned
by the universities involved and, in fact, consider them also to be
victims of such groups, we would like to underscore that such
unauthorized uses of university systems remain a major concern for the
game software industry and its efforts to curtail the activities of
these warez groups. We believe that the college MIS systems that were
targeted by these groups in the past must institute technical measures,
procedures and internal audits which will serve to prevent any
recurrence of such intrusions in the future. We also think that other
colleges not yet similarly victimized should take proactive steps to
prevent such unauthorized high-jacking of their bandwidth. In short,
this Subcommittee should stress to universities that they must maintain
a high degree of vigilance with respect to their IT equipment and
networks, as the members of these warez groups are constantly on the
prowl for the storage and bandwidth facilities that university systems
offer.
We applaud the work of this Subcommittee and the outstanding
efforts it has made to focus attention on the important issue of P2P
piracy and illegal uses of university systems. As noted earlier, the
entertainment software industry has a particularly large stake in
seeing that college environments are free from the illegal copying and
distribution of their game products. We earnestly believe that the
interest of this Subcommittee in this area has made a material
contribution to the great progress that the university community has
made in that direction. For this, we are most grateful.
supplementary statement of daniel a. updegrove, vice president for
information technology, university of texas at austin