 First, a survey of copyright law, the relevant provisions of copyright law in 1990 to repeat the moment when this technological revolution first took hold. In every piece of recorded music, there are two copyrights. First, the copyright in the musical composition. That first copyright comes with four entitlements, four traditional entitlements captured in the United States Copyright Act in section 106. First is an exclusive right to reproduce the composition. So the holder of the copyright, in the first instance, that's the composer, has an exclusive right to reproduce it, in, for example, sheet music format or in mechanical copies, tapes, records, CDs, and so forth. Second, the holder of the copyright has an exclusive right to prepare derivative works, new arrangements of the music, for example. Third, the copyright owner has the exclusive right to distribute the product to the public by sale or otherwise. And finally, the holder of the copyright has the exclusive right to publicly perform it. That's the first of the two copyrights. Until 1972, as a matter of federal copyright law, it was the only one. But since then, there has been a second copyright in every sound recording. That's not surprisingly the recording, the copyright in the recording itself, held in the first instance, typically, by the performer, although sometimes shared with the producer. Traditionally, certainly as of 1990, that copyright carried with it three entitlements, not four. So the performer or other holder of the sound recording copyright has an exclusive right of reproduction and an exclusive right to prepare derivative works. Also, the holder of the copyright in the sound recording has an exclusive right to distribute the recording, typically, again, by sale or gift or rental to the public at large. Interestingly, in the United States, one of the legs of this diagram is missing. So you notice here that the holder of a copyright in a sound recording does not enjoy an exclusive right of public performance. In most other countries of the world, certainly in Europe, for example, this entitlement exists, but it did not in the United States. The main significance of that gap is that when a radio station broadcasts a sound recording, it has to pay, through a series of licenses we'll discuss in just a minute, fees to the holders of the copyrights in the compositions. But it does not have to pay fees to the record companies, which typically hold the copyrights in the sound recordings. Just as important as the entitlements we've just reviewed are a series of exceptions and limitations. So you can think of the structure of the American copyright statute as, on the one hand, giving copyright owners an extensive list of rights, while with the other hand, withdrawing, cutting out of that bundle of entitlements a series of exceptions, limitations, and safe harbors. First of these is the first sale doctrine, which operates as a limitation on the exclusive right of reproduction. Roughly speaking, with some exceptions, we won't pause to consider. Section 109 of the American copyright statute says that once the copyright owner has authorized the distribution of physical embodiments of his creation, the first purchaser thereof can do whatever he or she wishes with it, can resell it, can rent it, and so forth. Second, cluster of limitations on these entitlements are known as compulsory licenses. So what a compulsory license consists of is an arrangement under which the law on the one hand gives the copyright owner an entitlement of some sort, one of the sorts we consider thus far, but on the other hand, forces the copyright owner to surrender that entitlement to a third party in return for a state-determined fee. The last of the exceptions that we're going to consider here, the most general and the most important is the fair use doctrine. Here's the doctrine itself. Section 107 of the copyright statute sets forth four factors that accord. When confronted with a fair use defense, must assess when deciding whether the defendant's behavior, although on its face illegal, should nevertheless be excused. And those four factors are first, the purpose and character of the defendant's activity. So for example, if the defendant is engaged in a commercial behavior that counts against him. If the defendant is engaged in a transformative activity, reworking the copyrighted material, that's favorable. If the defendant is engaged in making a parody, that's strongly favorable. Parodies are not automatically excused under American copyright law, but they come close. Finally, under this heading, a court is instructed to consider the propriety, the decency of the defendant's conduct. That's factor number one. Factor number two is the nature of the copyrighted work. Certain kinds of copyrighted materials are deemed susceptible of greater than average protection, or there's lesser than average protection. Specifically, fictional works are thought to be more strongly shielded than factual works, and unpublished works are given more protection than published works. So if the defendant has copied a unpublished piece of fiction without permission, he's quite unlikely to be able to invoke the fair use doctrine. Whereas if he has copied or distributed or modified in some way, a published factual work, like a news broadcast, he's much more likely to be able to invoke the fair use doctrine. Third factor, how much did the defendant take? This is both a quantitative inquiry, literally how much did the defendant take, and a qualitative inquiry. How important to the plaintiff's work was the portion appropriated without permission. Fourth and finally, the impact of the defendant's behavior on the potential market for the plaintiff's work.