The music industry is busy formulating its policy with regard to the enforcement of copyright on the Internet. The problems essentially rest with two main branches of the industry - the recording branch and those involved in the protection of copyright - although it would appear that the main concern lies with the Performers' Rights Society and its overseas equivalents.

According to a recent survey by Broadcast Music Inc. ("BMI"), one of the three largest entities in the USA which deal with the right to play musical works in public, about 26,000 Internet sites incorporate audio files. Some files first have to be saved to disk by the user and then played (e.g. .wav or mp3 files). Others, like Streaming Audio, play on the user's computer without his first having to copy them.

Like everything else on the Internet, the range of music is amazing: from simple passages on private sites to whole virtual record shops (like CDNow or Music Boulevard), which offer the customer brief clips to encourage him to purchase recordings; from commercial sites, which integrate music for encouraging surfers to do business with the site, to radio stations which broadcast over the Internet; from midi files made by enthusiasts to complete recordings (Interjuke Home) or live performances (http://www.liveconcerts.com).

Alongside all these are pirate sites that offer music files which have been copied from recordings without the copyright owner's permission. The mp3 file type especially encourages the establishment of such pirate sites. An ordinary music file tends to be very large. On the Internet, large file size means long downloading time. The advantage of the mp3 format is that it reduces file size by compressing it ten or more times with negligible loss of quality. Such a file, when played on computer, produces first class FM sound, very close to CD quality. It is therefore not surprising that at the beginning of 1997 student sites were flourishing in the USA, having converted to mp3 without the copyright owners' permission. The recording companies are taking aggressive action against sites of this type.

This profusion, involving new technology and global access, is confronting copyright owners with new problems: basic policy problems; new legal issues; and problems in the area of enforcement and collection. Here are some of them:

• Is the Internet friend or foe? Whilst the tendency is to be wary of the Internet, lest it bring about the collapse of the current arrangement of rights, the coin also has another side. Although the Internet provides a wealth of opportunity for pirate copying, its prudent exploitation can in fact encourage world music consumption. There are already virtual shops which are offering music files, as opposed to CDs, for sale (e.g. Liquid Audio). Marketing music over the Internet is likely to considerably reduce its price to the consumer, without reducing the copyright owner's income. Henceforth, it will be unnecessary to finance the CD production and packaging process and the price of music will not embody the cost of maintaining a large physical store, (rent, rates, salaries etc.) or the cost of importing and transporting CDs from the foreign manufacturer to the domestic distributor. In this respect it would appear that the Internet marketing of music poses far more of a threat to the record shops, as we currently know them, than to artists. For example the Gefen recording company believes that the Internet distribution of compressed music represents the industry's future marketing. One of the company's personnel, Jim Griffin, has been quoted by USA Today as saying "Microsoft and others have proven that intellectual property can be marketed on-line. There will of course be unlawful copies, but in a number which can be controlled and we will be able to gain fitting compensation".

• The Israeli Copyright Act,1911 prohibits the public performance of a work without the copyright owner's permission. "Performance" includes "acoustic representation" (section 35 of the Act). A parallel provision also exists in American law. Does the playing of a brief passage of music by the Streaming Audio method, in which the file is not copied onto the user's computer, constitute a public performance which is prohibited without the copyright owner's consent? The courts have not yet considered the question. An article recently published in Law Journal Extra! ("Music Performance Rights on the Net") concludes, without great difficulty, that the answer is affirmative.

• How can the sites which play musical works without permission be "caught"? The number of unlicensed radio sites operating in contempt of copyright is limited and locating them is relatively easy. Even so it would be difficult to collect royalties from them. On the Internet, the position is more difficult. The sites are many and multiply daily, frequently changing addresses, closing and popping up elsewhere. A partial solution is technological - BMI has developed software which scans the Internet 24 hours a day looking for sites which play music.

• How can action be taken against sites that copy musical works and offer them free to any visitor? So long as the infringing site is within the geographical territory of the interested country, the possibilities of action are almost self-evident. When the site is located on the server of a respectable Internet service provider, attempts should also be made to act against it. Presumably a letter before action would prove sufficiently effective (although in the writer's opinion the provider is not committing an unlawful act because one of its customers is offering infringing passages of music from its server). However, how can action be taken when, for example, a site has copied an Israeli artist's songs without permission and put them on a server in Finland? (The answer is that at present the law requires action to be taken in the state where the server is located.) What can be done when the operator of both the site and the server conceal their true identities? In the case of A&M Records v. Fresh Kutz the action was filed against "the Internet site known by the name Fresh Kutz and Anonymous Persons 1-10". Even then we expressed doubt as to whether an action could be brought in this way in Israel, having regard to the fact that an Internet site is not a legal personality capable of being sued. In the USA the question was not considered because the defendants did not go to court. Nevertheless, when the site operators intentionally conceal their identity, it is doubtful whether the plaintiff, or the courts seeking to assist him protect his rights, would have any other choice. The problem will arise in its full force when the copyright owner is not content with an injunction against the infringing activity but also wishes to sue for compensation. It is doubtful then whether a legal action could be brought against anyone other than a personality with legal capacity and even if judgment were awarded against such an abstract entity, it would not be capable of execution.

• To what extent can technology help copyright owners? Various technologies, like Multimedia Protection Protocol, are designed to enable the marketing of audio and multimedia over computer networks, whilst protecting copyright in the works. By means of this technology the work is encoded and can only be decoded on certain programs of authorised users by means of a key which the user purchases from the marketer. This is the way in which, for example, Liquid Audio, the record shop mentioned above, operates.

• BMI and ASCAP are seeking to expand the application of Internet music licensing. A survey conducted by BMI showed that only 2% of sites incorporate music files. However how can site owners who play music be charged royalties? The payment of royalties by radio stations can be enforced on the basis of the number of broadcasts. On the Internet, this is impossible.

The licences proposed by BMI and ASCAP for the on-line use of music are available at their sites. ASCAP offers no less than four different methods for computing the royalties payable, at the option of the site operators: one method computes the royalties on the basis of the total income of the site; another bases it on its income solely from music; a third derives the royalties merely from income on musical works whose rights are held by ASCAP; and the fourth is designed for non-profit organisations, where the royalties for which they are liable derive from their operating budget. The Law Journal Extra! has stated in this connection that "the application of ordinary rules to extraordinary technologies requires flexibility"!

Translated by Word Power