Moderator: OK, let's begin.

Moderator: Thank you, everyone, for coming to the Recording Industry Association of America (RIAA)'s CPNewsLink newsmaker conference today.

Moderator: We are pleased to welcome as our guests this afternoon Mr. Cary Sherman, president of the Recording Industry Association of America (RIAA), and Mr. Steven Marks, the RIAA's General Counsel and Executive Vice President.

Moderator: The RIAA's member companies are responsible for creating, manufacturing, or distributing approximately 90 percent of all legitimate sound recordings sold in the United States.

Moderator: As many of you know, the RIAA is an organization frequently in the news when it comes to issues of online file sharing and music piracy, and recent weeks have been no exception.

Moderator: Just yesterday, the RIAA announced a new campus anti-piracy initiative that significantly expands the scope and volume of its efforts while offering a new process that gives students the opportunity to avoid a formal lawsuit by settling prior to a litigation being filed.

Moderator: RIAA, acting on behalf of the major record companies, earlier this week sent 400 pre-litigation settlement letters to 13 different universities. Each letter informs the school of a forthcoming copyright infringement lawsuit against one of its students or personnel.

Moderator: The RIAA has requested that universities forward those letters to the appropriate network user. Under this new approach, a student (or other network user) can settle the record company claims against him or her at a discounted rate before a lawsuit is ever filed.

Moderator: A full press release describing these actions is available on Collegiate Presswire's web site at http://www.cpwire.com/artman/publish/article_1501.asp

Moderator: Today, we have the chance to hear from Mr. Sherman and Mr. Marks on these developments and gain some insight into the RIAA's perspective on these issues.

Moderator: Mr. Sherman and Mr. Marks, welcome.

Cary Sherman: Good afternoon. I'm pleased to join you all today. I am becoming a veteran of these online chats, which I very much enjoy. But just to keep things fresh, I have our general counsel, Steve Marks, here with me today. Make sure you save all the tough questions for him.

Cary Sherman: As many of you have probably heard, we launched yesterday a new anti-piracy initiative focused on the university community -- a significant escalation and expansion of our enforcement efforts, coupled with the implementation of a new process that gives students the opportunity to resolve copyright infringement claims against them before a formal suit is ever filed.

Cary Sherman: Since we first began suing individuals for illegal file-trafficking, we have witnessed immense growth in national awareness of this problem. There isn't a college student in America today who doesn't know that the online 'sharing' of copyrighted music is illegal. Yet file-trafficking on college campuses remains extensive and disproportionately problematic.

Cary Sherman: That, in turn, compromises our ability to invest in new music. Many of you probably have a favorite local band on your campus. If music theft is allowed to continue at such unacceptably high levels, the chances of those bands getting signed to a record label deal will continue to diminish.

Cary Sherman: It doesn't have to be like this. There is good news in the form of innovative business models like Ruckus' offer of free, legal music to any college student. But that alone will not turn this tide -- which brings me back to our new initiative. For more detail there, let me turn it over to Steve.

Steven Marks: Hello everyone. Thanks for having me. When it comes to the stepped up volume of this new initiative, I think the numbers speak for themselves. In the 3 years since we first filed suit against a university network user, we have sued about 1,000 students. Under this new program, we will initiate legal action against a similar number of students in just 3 months.

Steven Marks: In addition, these enforcement efforts will be hitting individual campuses in a big way. Ohio University received 50 of these letters this week. That's 50 students now facing legal action on just one campus alone.

Steven Marks: The other key piece is the implementation of a new step on the front end of our litigation process. We will now be sending pre-litigation settlement letters to schools, asking that administrators immediately forward the letters to the appropriate students. If we hear back from a student within a set amount of time, we can reach a settlement in advance of a lawsuit ever being filed. This means the student gets a discounted settlement and avoids anything ever appearing on a public record.

Steven Marks: Thirteen different schools received a total of 400 of these letters this week -- a pattern that will continue for many more schools in the months ahead. One final point. This is different than the DMCA 'notices' we send. As some of you know, we have tripled the volume of copyright infringement 'notices' we send to schools. That is a separate enforcement track from these pre-lawsuit settlement letters -- but we are happy to take your questions on either of these efforts, as well as other issues.

Moderator: Let's begin with a question that's on everyone's mind...

Moderator: How is the RIAA's new effort to address piracy on campus through education, enforcement and promotion of legal alternatives different from what you have done in the past to address this problem?

Cary Sherman: We are pursuing the same kinds of initiatives with universities as before -- education, enforcement, promotion of legal alternatives,and technical measures to inhibit illegal file-trafficking. But we're focusing more on the enforcement arm of the program in terms of lawsuits on college campuses. Frankly, we've found that students KNOW that downloading from unauthorized P2P systems is illegal, but the chance of getting caught isn't great enough to discourage them from doing it. By increasing the number of lawsuits, we're letting them know that the risk of getting caught is greater. That's also why we're bringing more lawsuits on a single college campus.

Moderator: OK, now we will turn it over to our participants for some questions.

Moderator: If you have a specific question for one of our speakers, please indicate to whom it should be directed at the front of your question.

Moderator: And now we will move to take our first question... Please stand by.

<Q>How does the RIAA select defendants liable for copyright infringment lawsuits? Is there a particular criteria for the infringer, such as the amount of uploaded/dowloaded files? What should students be aware of in regards to being a possible infringer?

Steven Marks: We go on P2P services just like any other user to find those students who are uploading and downloading files. While our lawsuits three years ago initially focused on egregious infringers (those with hundreds of files available), today we do not have any minimum amount of files in order to move forward with a lawsuit. Students should understand that they are not anonymous when they use P2P services.

<Q>Of the 13 schools you're sending "pre-litigation settlement letters'' to, only five are among the top 10 offenders according to the list the RIAA released last week, and one (Southern Cal) isn't even in the top 25. How did you decide which schools to contact?

Cary Sherman: We don't target universities, we target individual infringers. If there are a lot of individual infringers at a particular school, it's more likely that the infringers at that school will be sued (or at least receive our pre-lawsuit letter). The fewer infringers at a given school, the less likely infringers at that school will be sued.

Cary Sherman: As for the comparison between the top 10 or 25 offenders -- that was a list of schools who received the most DMCA take-down notices from us. Many of the schools are the same, but there's no reason to think that they would have to be.

<Q>what are some of the punishments students will be faced with if they get caught doing this?

Steven Marks: We file civil lawsuits for copyright infringement in federal court. Copyright law provides for statutory damages ranging from $750 to $150,000 per work infringed. We are now offering students the ability to settle cases before we file a case in federal court. We are sending universities "pre-lawsuit letters" notifying them of infringements on their networks. We are encouraging the university to send the letter to the student. If the student contacts us to settle the case within twenty days of when we send the letter to the university, we will settle before a lawsuit is filed on the public record.

Steven Marks: But the reason not to engage in this activity is not just the punishment. These services often include damaging adware and spyware for computers. Most importantly, we hope that students will explore the legitimate digital music market so that artists and labels can be paid for their music and continue to create more music in the future.

<Q>Is the RIAA afraid that more aggressive tactics will create a backlash among students, especially in technology circles, who may develop technology or other means that are even harder to track?

Cary Sherman: There will always be those who develop technology to hack, to steal, to whatever. We can't fail to take action to stem the serious problem we're facing now just because someone clever can make the problem even worse. The industry is already facing devastating losses, and artists, songwriters, producers etc. are leaving the industry in droves. We need to do something NOW. We also hope that, by clearly reminding people that stealing music is illegal, we may force them to think about what they're doing and why it's wrong, rather than assume they'll simply find another way to steal.

<Q>Are the complaints against students based on high-volume usage or are they randomly chosen based on any type of, no matter how insignificant, transgression?

Steven Marks: There is no minimum amount of files. While we targeted more egregious users when we first filed lawsuits three years ago, since then everyone should be aware of what is legal and not legal. Therefore, any user can be the subject of a lawsuit.

<Q>On average how much does a person have to download illegally to have legal action taken against them?

Steven Marks: There is no average or minimum amount of files. Any user on the system uploading and downloading can be the subject of a lawsuit.

<Q>Is there any criteria to determine which students are issued pre-litigation settlement letters versus full lawsuits?

Cary Sherman: All students will now be offered pre-litigation settlement letters, if their university sends the letter to them. If the student fails to contact us to arrange a settlement within 20 days, a full lawsuit will follow.

<Q>How helpful have universities been in attempting to control music theft?

Steven Marks: Many universities have been responsive and understand their obligations to educate students about the value of intellectual property. But most have not done enough, which is one reason that illegal activity is so pervasive on university networks. P2P usage also is a problem for universities because it consumes bandwidth, thereby slowing down university systems and raising costs for universities.

<Q>Mr. Sherman or Mr. Marks: A number of students and experts here at USC are questioning your new plan, saying that in effect you are inducing students to confess while running an end run around the legal process. They say that students who know little about the law will be tricked into settling when they may have a better option, and that the RIAA gains by avoiding costly legal fees. How do you respond.

Steven Marks: We have heard from a number of defendants that they wished to have the option of settling before a lawsuit was filed. Our new program is in part response to those expressions of interest in settling before a lawsuit is filed. Settlements are completely voluntary, so a student can turn down our offer to settle before filing a suit in order to have his day in court if he wishes.

<Q>What are your thoughts on Steve Jobs' proposition to eliminate digital rights management in the media world and focus on selling device- and program-independent music instead of wasting resources on the near-impossible task of eliminating illegal file sharing?

Cary Sherman: Steve's position is frankly surprising. Most software is protected by DRM. His Pixar movies are protected by DRM. Why should music be the only copyrighted work that doesn't have protection? The problem that led to Steve's posting on music was pressure from European governments to open up the iPod and iTunes to competitive products. We strongly believe that we should have interoperability (although we think this should be what's done in the marketplace, not by government mandate). We think an interoperable set of music services and devices can expand the market for everyone. But you don't need to throw out DRM to solve the interoperability problem. Apple can simply license its antipiracy technology to other companies. Apple could also participate in any of a number of worldwide standard-setting initiatives designed to make DRMs interoperable. Finally, remember that DRM ENABLES new business models. You couldn't have a subscription service, for example, without DRM. DRMs

<Q>It seems as though the RIAA is hestiant toward this change in technology and how music is distributed. Is it possible to embrace the current trends, and work with the new wave of music distribution, instead of refusing to adapt?

Steven Marks: Record labels have licensed virtually every new service that has come along, including free, ad-based services for students like Ruckus. Record companies have also licensed P2P services, such as iMesh. They understand that their future depends upon new ways for consumers to enjoy music. But those new models will only work if they are not competing with illegal activity.

<Q>Is this wave of "pre-lawsuit letters" the first of many? And if so, how frequently will these letters be sent out?

Cary Sherman: This was indeed the first wave of pre-lawsuit lettters. We're planning on doing about 400 every month.

<Q>How do you intend to prove that the student being charged actually did the downloading? What if they claim that someone stole their information or they forgot to log off of a common computer?

Steven Marks: We routinely deal with situations like this. For example, if a roommate comes forward as the person who engaged in the activity, we can drop the case against the original defendant and file a new case or settle with the roommate.

<Q>Mr. Marks, how effective will this new initiative be if universities refuse to give out individual user's information and is there any legal ramifications for the universities themselves?

Steven Marks: We believe universities have every incentive to forward the letters to students. How would a student feel if his or her opportunity to settle at a substantial discount and before the lawsuit was filed on the public record was lost because the university did not forward the notice?

<Q>How have schools responded to the pre-litigation settlements?

Cary Sherman: The letters just went out yesterday, so we don't know yet. But preliminary indications have been very positive. Universities like the idea of helping their students avoid a lawsuit, and certainly don't want to stand in the way of an opportunity to settle quickly and for less money. They also feel an obligation to educate their students about the law, and this is an easy way for them to do it.

<Q>What are the ultimate consequences of the lawsuits? Will the students be fined? Will jail time be served?

Steven Marks: The lawsuits are civil, not criminal. But copyright infingement penalties can be steep, especially for a student. Statutory damages range from $750 to $150,000 per recording infringed. We offer settlements at much lower amounts than would usually result from a fully litigated court decision. This is especially the case for settlements that are done before we file a lawsuit in federal court.

<Q>Stealing music, of course, is illegal, but by sharing music from artists, particularly new artists, does it not make the public more aware of them and in turn become more profitable?

Cary Sherman: Any artist (and his/her business partner, whether an indie record label or a major) can pursue that strategy and make their music available for free, whether on p2p or other online sites. If they think they'll get more promotional value than they'll lose in sales, that's a great strategy. The point is that it should be up to them to make that decision -- not some p2p operator who is making money on their music without their permission, and not some downloader who decides to take rather than buy their music.

<Q>Once you find out which computer the illegal files have been downloaded to, how will you know for certain that the computer's owner was the one who downloaded the files? It is possible it could have been a roommate or friend without the owner's knowledge. Does that matter or will the owner be held accountable?

Steven Marks: If the roommate comes forward, we can drop the case against the original defendant and settle with the roommate instead.

<Q>If a university recieves a certain number of complaints will the university also be prosecuted? If so, how many complaints would it require to take action against a university?

Steven Marks: The actions are not against the universities, but we hope and expect that the universities will pass along the letters to students and help us educate students on the value of intellectual property.

<Q>Why is the RIAA against the FAIR USE Act?

Cary Sherman: Because that bill would essentially legalize hacking of antipiracy technology. That's not good for consumers or creators. If it weren't for antipiracy technology, you wouldn't have DVDs. You wouldn't have subscription services. It's DRM that encourages content owners, whether movie studios or record labels, to release their content with the hope that it won't be passed around the world and given away. Legislation that legitimizes the hacking of these technologies will discourage new and innovative offerings by content creators. You should also understand that record companies are big proponents of fair use. Everything in art is based on what came before, and we therefore depend on a vibrant fair use doctrine to protect us and our artists against meritless infringement claims. So we're all for fair use.

<Q>Steven, how do you choose which students to single out for lawsuits?

Steven Marks: No. We do not know the identify of any student until the university provides the identifying information after receiving a subpoena from the court. Our new program is designed to give students the opportunity to settle before a case is filed in federal court. The student can come forward before the case is filed to settle once the university forwards our letter with the details of the infringement. The basic message is simple -- anyone can be caught. We find illegal activity merely by going onto the P2P systems. There is no anonymity.

<Q>How much is the average settlement?

Steven Marks: We do not publish the average settlement amount. The new program, however, offers students the ability to settle cases at a substantial discount from the average settlement if they come forward to settle before the case is filed in federal court.

<Q>Are there any other consequences students will have to go through, besides paying a large fee?

Steven Marks: Settlements also require the student not to engage in the illegal behavior in the future.

<Q>Why do you think this is such a growing problem? Especially for college students?

Cary Sherman: Because students have more time than money. And because "everyone else is doing it," so the peer-to-peer reaction is "why shouldn't I do it too?" As a result, more and more students are coming to think that free music is a right. We've got to change that perception. When I was in college, the local record stores were a really important place to hang out. How many of you have local record stores on your campus nowadays? Think about why they're no longer in business.... Don't get me wrong -- we understand that music is really important to college students. You're among music's biggest fans (and you used to be our biggest buyers). We want you to enjoy our music -- but we'd like you to do it legally.

<Q>What would the benefits be of settling? Would you be willing to drop all charges if a student deleated their files?

Cary Sherman: No, we don't drop charges just because a student agrees to delete the illegal files. What kind of deterrence program would that be? Any student could infringe until caught, and all that he'd have to do to get out of trouble is delete the files? That's why we're very firm about this. When we file a lawsuit, we pursue it. The advantage of settling is that you can do it for less. In fact, the earlier in the process, the more reasonable the settlement.

<Q>Is there any concern that forcing students into legal settlements and lawsuits creates a considerable strain on students already struggling to pay for rising tuition costs?

Steven Marks: Artists, background musicians, songwriters and others in the music industry have suffered tremendous harm from this illegal activity. Thousands of jobs have been lost. Unfortunately, holding people responsible through legal actions has proven the best deterrent to this continued illegal and harmful activity. We hope that one day soon these suits will not be necessary.

<Q>If the school does not forward the letters, and the school will not release the names how will the RIAA find the student committing the crime?

Steven Marks: If the school does not forward the letter to the student, then we will move forward and file the lawsuit. Once we file the lawsuit, the court will issue a subpoena for the university to provide us the identity of the student.

<Q>Mr. Marks, how does the RIAA plan to pinpoint individual users and is this initiative an attempt to force the universities to comply?

Steven Marks: The new program -- offering students the ability to settle before a case is filed -- is in response to many defendants who told us that such a program should be available. The universities have every incentive to provide their students the ability to settle for a substantially discounted amount and before a lawsuit is filed in federal court on the public record. Of course, this early settlement is completely voluntary for the students.

<Q>Is the amount required for students to settle going to be based on the amount of illegal downloading, or is it going to be a flat rate?

Cary Sherman: We have settlement parameters that are closer to a flat rate. The amount of illegal activity may be a factor, just like how early in the process the settlement occurs, but we try to stay close to our general settlement parameters as a rule. Understand -- we don't make money off this program. It costs us a lot to pursue these lawsuits. But even more important, anything we recoup is an infinitesimal (sp?) portion of what we're losing every day.

Moderator: We have time for just a couple more questions...

<Q>Does the RIAA have the resources to sue every individual who gets a letter, or are they relying on a certain amount of settlements?

Cary Sherman: We only send letters where we have the resources to file a lawsuit. And if we send a letter and don't get a response, we do file a lawsuit. We never send a letter if we don't intend to sue.

<Q>University of Southern Maine, Free Press. Currently students are sanctioned by the University if they are caught illegally downloading music. Will the pre-lawsuit letters replace the current sanctions or be applied at random to select offenders, supplementing what is already in place?

Steven Marks: We have two different enforcement tracks. First, we routinely send DMCA notices to schools. We have tripled the overall number of these notices recently. Once the university receives this notice, it deals with the student according to university policy. The second track is the lawsuits that we file against individuals. We send a pre-lawsuit letter to the university identifying the IP address for students engaged in illegal activity. These letters will turn into a lawsuit in federal court if the student decides not to settle the case within twenty days. If the case goes forward, the student is subject to copyright infringement penalties under the copyright law.

<Q>What are some more effective ways to increasing awareness towards infringement within campuses throughout the nation other than the scare of an increased enforcemnet policies? What are some past precedent college student cases that shows the severity of the consequences of illegal downloading?

Cary Sherman: The sad truth is that traditional efforts to increase awareness -- education -- have not been very effective at changing behavior. We've done surveys and focus groups, and we've found that college students are more likely to change behavior if they are at risk of personal consequences than because something is illegal, or might hurt other people. The lawsuits have done more to increase awareness than anything else we've done, and numerous surveys have shown that the number one or two reason that people have stopped illegal downloading is to avoid the risk of lawsuits. It's sad that we have had to do this, but it's been the most effective deterrent to date.

Moderator: OK, that wraps up our time for questions. Mr. Sherman and Mr. Marks, any closing remarks?

Steven Marks: Thanks for all your questions. We hope everyone realizes that this is a means to an end -- the end is a vibrant, legal digital marketplace that offers students and other consumers exciting new ways to enjoy music. Most people think of music as water -- that it will always be there. But, in fact, if music creators are not fairly compensated for their work and investments, the music will dry up.

Cary Sherman: It's clear from this little conversation today that music is an important part of your lives, and that's just great. In fact, we're finding that more music is being acquired today than ever before -- it's just that less and less of it is being paid for. That's what brings us to what we've had to do -- and I assure you we wish we didn't have to.

Cary Sherman: We all got into this business -- whether at a record label or RIAA -- because we love music. We hope that everyone who loves music will understand that musicians can't create if they're not paid for their work. I'd hate to think that the next Red Hot Chili Peppers has to go back to waiting tables because they can't make a career in music. With a little more thought, college students can help change the tide and give music the value it deserves. Thanks for listening.

Moderator: This concludes today's newsmaker conference with Cary Sherman, president of the Recording Industry Association of America (RIAA), and Steven Marks, the RIAA's General Counsel and Executive Vice President. The conference is brought to you on CPNewsLink, a joint service of College Publisher and Collegiate Presswire.

Moderator: On behalf of the RIAA, thank you for attending, and thank you for your interest. And, on behalf of the college journalists attending this event, and those reading about it, our thanks go out to Mr. Sherman and Mr. Marks for taking time out of their busy schedules to chat with us today.

Moderator: If you have additional questions about this story, please direct them to Jenni Engebretsen or Jonathan Lamy of the RIAA at (202) 775-0101.

Moderator: Additionally, for your use in writing a story, we will be sending a full transcript of this event over Collegiate Presswire to all of our subscribing newspapers shortly, and we'll be posting a copy on the front page of the CPNewsLink website after that. (http://www.cpnewslink.com)

Moderator: As a reminder, we will be hosting additional CP NewsLink newsmaker events throughout the upcoming year, so please keep an eye on this website for details.

Moderator: We hope you enjoyed this chat, and trust that it provided you with some insight and perspectives into this issue for your use in writing stories on this topic.

Moderator: Thank you, once again, for attending today's CP NewsLink conference.

Moderator: Good bye, everyone!