CA State's two university systems reach a music deal with Cdigix

["Jones, Gary" <gjones () CALSTATE EDU>]

On Campus, Legal Music Services
California State's two university systems reach a deal with Cdigix in an
effort to fight piracy.
By Alex Pham
Los Angeles Times Staff Writer

July 19, 2005

In an effort to curb rampant piracy among college students, the
University of California and California State University systems on
Monday announced a deal to offer legal music and movie download services
to 600,000 students.

The agreement with Englewood, Colo.-based Cdigix Inc. is the largest
since campuses across the country began searching two years ago for
alternatives to the illegal peer-to-peer downloading that clogged their
computer networks and put students in legal jeopardy.

Cdigix's contract gives administrators at all 13 UC and 23 Cal State
campuses the option of offering online music and movie services to
students. 

Both UC and Cal State also are negotiating with other providers - such
as Napster Inc., Sony Corp. and Mindawn - in the hope of giving campuses
a choice of services.

Individual campuses will decide whether to subsidize the services
through student fees, as is done at some schools.

"We're doing this because we do recognize that there is illegal file
sharing of intellectual property," said David Walker, director of
advanced technology at the University of California, which represents
200,000 students. 

"We felt we should do something to encourage legal services."

More than 50 U.S. colleges and universities - including Pennsylvania
State University and University of North Carolina - already have struck
deals to offer legal music services to their students, according to the
Recording Industry Assn. of America, the trade group for the major
record companies.

Fast campus networks make universities hotbeds for illegal file sharing,
said Eric Garland, chief executive of Los Angeles market research firm
Big Champagne. 

Measuring the extent of illegal downloading is difficult because
students don't want to admit to doing something illegal and because
universities don't spy on their students' online behavior, Garland said.

But that hasn't immunized schools from legal problems.

In 2000, rock band Metallica sued Yale University, the University of
Southern California and Indiana University for failing to block the
original Napster file-sharing service. 

The band dropped its suit after the universities agreed to limit access
to Napster on campus.

Napster has since been reborn under new corporate ownership as a legal
music subscription service.

Lawsuits against schools are rare, because, as Internet service
providers, they are generally protected against liability for their
students' actions online. Even so, schools must contend with thousands
of copyright infringement notices from record labels and movie studios
requesting that illegal copies of songs or films be taken off their
computer networks.

Last year, for instance, each UC campus received 80 to 400 such notices.

Offering legal alternatives to file sharing is "a way for universities
to try to get around this problem that they've inherited. They can point
to these services and say they're making an effort to make legitimate
services available to their students," said Mike McGuire, an analyst
with Gartner Group Inc. "The challenge for them now is to make these
legal alternatives compelling to students." 

Cal State's campuses and UC's campuses will now decide on their own
whether to offer Cdigix services, and if so, whether to subsidize the
company's $3 monthly fee for the music service or the $5.99 monthly
video programming fee.

Cdigix's fees are well below the $10 a month charged by many music
subscription services. 

Cdigix co-founder and President Brett Goldberg said campus services were
cheaper because record labels cut their fees as a way to wean students
away from illegal file sharing.

"In the college market," he said, "there's an adjusted cost structure
that has to do with the strategic relevance [to record labels] of the
target audience."