MR. MCLAUGHLIN: Issue one: SCOTUS rulings. Affirmative action was given life support on Monday by the U.S. Supreme Court. Race can be used as a factor in achieving diversity by the admissions office at the University of Michigan, so says the court, as long as it is used as just one factor in the overall grading of an applicant, and not by assigning points automatically on the basis of color.

Michigan's Law School stayed within the no-points and other guidelines the court stipulated, so its admissions policy is okay. But Michigan's undergraduate college did not stay within the guidelines. Its admissions office assigns a number of points automatically to candidates of color: 20 points on a 150-point scale.

Justice Sandra Day O'Connor, who wrote the majority opinion, said that she hopes that in 25 years' time, no affirmative action programs would be necessary.

Question: The high court said okay to Michigan's Law School, and not okay to the university's undergraduate college. It turned chiefly on the giving out of points, aka quotas.

Question: Today, the justification for affirmative action is what some think is a vague concept of diversity, without regard to past injustice or equal opportunity. Is it correct to say that the concept of diversity as a value, in and of itself, hardly merits relying on reverse discrimination as a means to that diversity?

Clarence Page?

MR. PAGE: Well, merit or not, John, diversity is the wave of the future. By the way, Eleanor and I thank you for practicing it on this panel here.

MS. CLIFT: Right! (Laughs.)

MR. PAGE: (Chuckling.) And we appreciate that very much.

The fact is, it is becoming more difficult now to prove statistically institutional discrimination. You could certainly show a disparity between a black and Hispanic and white and Asian test scores or performance coming out of the lower grades, but you can't -- and so they show that's a product of discrimination. But certainly, diversity now provides a justification that universities can use -- quite properly, as our society becomes more diverse, one can say that it pays for the future leaders of this country to be more aware of how to deal in a multicultural surrounding. Doesn't mean the affirmative action debate is over, but it is changing. And perhaps we can move beyond it at some future time.

MR. MCLAUGHLIN: Well, do you think the price of diversity is reverse discrimination? Namely, the white is the one who will lose.

MR. BLANKLEY: Well, white, Asians, Jews, any -- whoever is not the selected race of the moment. But George Will made a wonderful point after this came out. He pointed out that this is going to get swept aside by demographics, because increasingly, we don't know what we are. You know, if you're an Argentine, you're a Hispanic. If you're a Brazilian, you're not a Hispanic. People are intermarrying. And the whole concept of even being able to define race becomes increasingly sounding like a Hitlerian effort to define race.

MR. PAGE: Well, to quote Colin Powell -- to quote Colin Powell, if you look like me, you're black. (Chuckles.) Everybody knows that, you know. So we're kind of a long way from being a color-blind society.

MR. BLANKLEY: And so, it's going to get passed by the reality of how humanity lives.

MS. CLIFT: Yeah. I view this as sort of an antitrust action against the monopoly that whites have had in elite schools and in other places. And maybe at some point we won't need it anymore.

But Sandra Day O'Connor herself is there because of affirmative action. President Reagan wanted to name a woman to the Supreme Court; he only looked at women. And if you ask her if she got her position as a result of affirmative action, she will say yes without hesitation. And people who --

MR. MCLAUGHLIN: Eleanor --

MR. BLANKLEY: And another good argument against affirmative action!

MS. CLIFT: And the people who weighed in on the side of affirmative action -- the military service academies, the Fortune 500 companies, Norman Schwarzkopf. And on the other side you had something like the Center for Individual Rights, which is a conservative front group --

MR. MCLAUGHLIN: Eleanor, you're missing the point.

MS. CLIFT: I don't think so.

MR. MCLAUGHLIN: The point is that affirmative action was based and has traditionally been based on equal opportunity and non- discrimination of race. Equal opportunity and racial indiscrimination. Neither one of these apply in the case of diversity. Diversity is a vague concept, and it doesn't have those strong underpinnings.

MS. CLIFT: Diversity -- but diversity is how you get --

MR. MCLAUGHLIN: And the price of that diversity is that some white is excluded.

MS. CLIFT: Yeah, but diversity is how you get football players and violin players and people from Nebraska. And lots of whites are going to be excluded from elite colleges because there are too many qualified -- (inaudible) --

MR. MCLAUGHLIN: The point is, if you don't -- if you --

MS. CLIFT: This has admitted qualified people, not unqualified.

MR. MCLAUGHLIN: If you don't have past injustice that you are repairing, and if you do not have equal opportunity which you are preserving, then you cannot establish a ground as a vague -- the vague concept of diversity.

MR. BAKER: Yes. Could I just --

MR. MCLAUGHLIN: Isn't that true?

MR. BAKER: Well, let me just --

MS. CLIFT: Two hundred years of slavery is past injustice. (Laughs.)

MR. BAKER: Yeah, if I could just ask for some affirmative action so that an Englishman could speak here in this conversation. (Laughter.)

I think it's pretty clear that the policy of affirmative action that's been followed over the last 30 years has -- as Eleanor said, has produced some real benefits, and it was very striking that it was groups like the armed forces and many, many companies who were weighing in on the side of affirmative action.

The interesting thing about the case was there was a lot of criticism, especially from the conservative side, that the two cases resulted in confusion; that you had -- the court said no to the undergraduate school program, which was a very specific, targeted program --

MR. MCLAUGHLIN: Because of points.

MR. BAKER: -- and yes to the general one. But I think actually that was exactly right, because I think that affirmative action has been demonstrated to work. It's very important that schools and institutions continue to find ways to encourage diversity, to promote diversity. But it would be wrong for the court to lay down -- to start saying that particular program is -- we want this one and we don't want that one, to schools and other --

MR. MCLAUGHLIN: Okay. Homosexual civil liberties.

On Thursday, a watershed ruling on gay rights from the Supreme Court. The ban on homosexual acts in the state of Texas was overturned. The court, by a 6 to 3 ruling, said that the ban was an unconstitutional violation of privacy that, quote, "demeans the lives of homosexual persons," unquote.

The new ruling reverses the high court's position of 17 years ago. Then the court ruled the states did have jurisdiction to punish homosexuals for engaging in so-called deviant sex.

Question: Does this ruling open the door to gay marriages?

Eleanor Clift?

MS. CLIFT: I think the trend in society toward gay marriages already exists, and we're going to get there. And this ruling probably speeds it up a little bit. It strips away the constitutional protection against gay adoption and gay marriage, and also the resistance in the military to open gays serving in the military.

MR. MCLAUGHLIN: Well, this decision was based on the right to privacy, and by no stretch of the imagination can the right to privacy be involved in any concept or any reality of gay marriage. So it's not a legal stretch, it is a social and political stretch over into gay marriage. Do you agree with that?

MR. BLANKLEY: No, no, no, no --

MR. BAKER: I agree entirely, John.

MR. BLANKLEY: No, you were both wrong.

MR. BAKER: There's a different set of institutions, which are completely different from the issue of privacy or -- (changing from British to American pronunciation) -- privacy, which is that -- at least that marriage is an institution. There going to be a whole range of social, cultural, religious questions, all of which have to be resolved before, I think, we get to -- before we get that far.

MR. BLANKLEY: Look, as the majority opinion said, this isn't about sex, it's about relationships, and the relationships are protected under their notion of constitutional privacy that -- it was conjured up in Griswold v. Connecticut.

But look, the -- once you get into the question of relationships, then you do get to the whole question of marriage and other issues. And yes, I think that it is going to go down that path. And --

MR. PAGE: I think it's -- (inaudible) -- I see a different reading, though, Tony. I don't think it's relationships. I think it's privacy. The issue here is privacy.

MR. BLANKLEY: No, no, you miss the point. Privacy protects relationships.

MR. PAGE: Yeah.

MR. BLANKLEY: And they said it's not about sex, it's about a relationship, and we have to respect the relationship.

MR. PAGE: But this was a case -- look at the case, though. Look at the case. Here were two guys --

MR. BLANKLEY: Oh, I'd rather not, but -- (laughs) --

MR. PAGE: Here were two guys, in the privacy of their own home. You know, whether you like what they did or not --

MR. BLANKLEY: Yeah. Yeah.

MR. PAGE: -- somebody called the cops.


MR. PAGE: The cops bust and bust these guys within the privacy of their own home.

MR. MCLAUGHLIN: The question was --

MR. PAGE: That offends the Constitution. It offends our notions --

MR. MCLAUGHLIN: I don't think anybody on this panel is disputing that.

MR. PAGE: You're right, John. So --

MR. MCLAUGHLIN: But we want to say, does it reach --

MR. PAGE: Exactly. To answer your question, you're going from a privacy issue to a very public thing, which is marriage, which is institutional, which government has always regulated in the past. I don't think that automatically one leads to the other. However, it does prove that --

(Cross talk.)

MS. CLIFT: I think that there's going to be a backlash to this decision, and nothing is going to happen on the federal level. There will be change that will evolve in the states, gradually. This is the direction we're heading, like it or not.


MR. MCLAUGHLIN: Exit question: On balance, were these rulings enlightened, ones that advanced the quality of life in America, or were they mistaken rulings which degrade the quality of life in America?

Gerry Baker?

MR. BAKER: I think they were enlightened, and they improve the quality of life in America.


MS. CLIFT: Conservative court came through by a one-vote majority, which sets the stage for a fierce fight when there is a vacancy on the high court, because the cultural wars are under way.


MR. BLANKLEY: I think it was bad law leading to ambiguous --

MR. MCLAUGHLIN: In both rulings?

MR. BLANKLEY: Oh, yeah, I think the -- yeah. I mean, we can debate it again, but the affirmative action rule is -- makes, to me, no sense. But nonetheless, they took a footnote from Bakke and turned it into the governing principle, compelling state interest --

MR. MCLAUGHLIN: Right, right, right. But do you feel that way about the homosexual acts, too?

MR. BLANKLEY: And the homosexual one was an act of legislating moral judgment, which is up to the state legislatures, under the 10th Amendment.

MR. MCLAUGHLIN: So the rulings were -- both rulings --

MR. BLANKLEY: Bad law.

MR. PAGE: Well, if was bad law, it's no worse than Plessy v. Ferguson or three-fifths of a person. I mean, we've certainly made great progress, and we're moving in the right direction. And overall, the country's better off for both decisions.

MR. MCLAUGHLIN: I have serious and insuperable problems on the subject of affirmative action rooted in diversity. I feel that it's a vague concept. And I can see, of course, affirmative action in the other two areas of racial nondiscrimination and also equal opportunity. I also feel that by isolating race as a factor in itself that can turn the scales puts too much on -- emphasis on race, and it works against itself within the college environment, where blacks stick with blacks, and whites stick with whites, and Asians tend to stick with Asians and Latinos with Latinos.

MR. PAGE: But we're less segregated now than we used to be, John, aren't we?

MR. MCLAUGHLIN: The less we have of that, the better. (Cross talk.)

With regard to homosexual acts, I concur with the court.

When we come back: Does the White House have an exit strategy for Iraq, or are we there for the indefinite future?


MR. MCLAUGHLIN: Issue two: Embedded in Iraq.

Grim assessments from General John Abizaid, successor to General Tommy Franks as the new head of Central Command, controlling Iraq and the region. Abizaid is the highest-ranking Arab-American in the military, American-born, of Lebanese descent, fluent in Arabic, very highly regarded by peers, and noted for honesty and candor.

LIEUTENANT GENERAL JOHN ABIZAID (U.S. Army, incoming commander, Central Command): (From videotape.) And it is perplexing to me, Senator, that we have not found weapons of mass destruction when the evidence was so pervasive that it would exist.

MR. MCLAUGHLIN: There are other voices in Washington calling for a reality check on postwar Iraq. Senator Richard Lugar, the chairman of the Senate Foreign Relations Committee, and Joseph Biden, the ranking Democrat on the committee, both just back from Iraq, with a sobering message:

SENATOR RICHARD LUGAR (R-IN): (From videotape.) But again and again I've said at least five years for a plan. This idea that we will be in just as long as we need to and not a day more -- we've got to get over that rhetoric. It is rubbish! We're going to be there a long time.

SENATOR JOSEPH BIDEN (D-DE): (From videotape.) But no one back home understands how monumental thinks undertaking is going to be, how long it's going to take, how much it will cost, how many troops it will take. The president needs to level with the American people about this.

MR. MCLAUGHLIN: Question: Does the White House have any exit strategy for Iraq, or are we there for the long haul and more body bags? I ask you, Tony.

MR. BLANKLEY: First -- yeah. Well, first of all, body bags are for dead squirrels. Human remains go back in coffins.

But no, I don't think there's an exit strategy. There shouldn't be an exit strategy. Senator Lugar had it exactly right; we are there for an indefinite period. We are going to have to follow through on our project.

Biden -- Senator Biden has it exactly wrong. I think the American people have always understood that this is a major project, and there's not going to be a cheap price to pay. And my sense is that the public is going to accept that, because they understand the dangers if we don't manage terrorism in the Middle East.

MS. CLIFT: Yeah, well --

MR. MCLAUGHLIN: The U.S. military deaths in Iraq now totaled 198, and the British military deaths in Iraq, 43 total, and 6 died this week.

MS. CLIFT: The president has not been candid with the Congress or with the American people about the cost of the commitment and the length of the commitment. And I think if there's an exit strategy, it's the presidential election of 2004. By October of 2004, he's going to want to say Americans are heading home.

And frankly, if we continue to suffer the kind of casualties we're suffering, a day -- one or two on an almost daily basis, I think you're going to have a clamor in this country to bring the troops home, unless they can internationalize the occupation. It cannot proceed as an American occupation.

MR. BAKER: I just --


MR. BAKER: Sorry, Eleanor. I don't think there's any evidence of that whatsoever.

MS. CLIFT: Any evidence for what?

MR. BAKER: I don't think anybody's talking about an exit strategy, and I don't think it'll be done on a political timetable. It's absurd to talk about an exit strategy at this stage. This is going to be a very, very, very long -- look, this is two months from the end of major combat operations. Why is anybody even considering an exit strategy?

The numbers for casualties you gave, tragic as they are, are still, in the great scheme of things, in terms of what the U.S. and Britain have done in liberating Iraq --

MR. PAGE: Gerry -- (inaudible) -- this is terrible.

MR. BAKER: -- liberating Iraq and changing the whole equation in the Middle East, is quite extraordinary.

MR. PAGE: This is dreadful, Gerry. Gerry, this is dreadful.

MR. BAKER: This is a remarkable change.

MR. PAGE: I think for anybody that's paying attention, Iraq is a mess right now.

MS. CLIFT: Right.

MR. PAGE: I mean, they've got no power, electricity. I mean, we're being picked off one by one.

MR. BLANKLEY: They do have power and electricity on, which is, by the way, the same thing.

MR. PAGE: We're being picked off one by one. I meant electricity and water. We're being picked off one by one as days go by. Sure, it's not an issue now, but if we're like this a year from now, people are going to start saying, "Where's the exit strategy?"

MS. CLIFT: It's President Bush --

(Cross talk.)

MR. MCLAUGHLIN: Eleanor? Hold on, Gerry.

MS. CLIFT: It's President Bush who stood on that aircraft carrier with a big banner behind him that said, "Mission accomplished." And that photo op --

MR. BAKER: This is very --

MR. BLANKLEY: They said major hostilities. They always said major hostilities. They never said the war was over.

MS. CLIFT; They had no postwar plan.

MR. MCLAUGHLIN: All right. Gerry? Gerry? Hold on.

MR. BAKER: I just think this is insulting to the intelligence and the staying power of the American people and the British people. Nobody said, after a year in Japan and Germany in 1946, "Oh, we're losing people; what's the problem?"


MS. CLIFT: I'm with Senator Lugar.

MR. MCLAUGHLIN: I want -- hold on, Eleanor.

MR. BAKER: The American people and the British people are prepared to see this through.

MR. MCLAUGHLIN: Eleanor, hold on.

I want to take a little longer view here, and I therefore want to quote from Retired Major General William Nash, who served in the first Gulf War, Operation Desert Storm, in the military; that is, in the fighting. That was 1990 to 1991. And then he was civil administrator in the town of Safwan, in southern Iraq, after the war, doing what our forces now are doing in Baghdad and in Iraq generally. Nash also served as U.N. civil administrator in Kosovo in that peacekeeping operation. Okay? Here's what he said this week, particularly interesting because this man has been in the field.

"The U.S. has failed to understand the mind-set and attitudes of the Iraqi people and the depth of hostility towards the U.S. in much of the country. It is much greater and deeper than just the consequences of war. It comes from 12 years of sanctions, Israelis and Palestinians, and a host of issues. We are now seeing the reemergence of a reasonably organized military opposition, small-scale, but it could escalate. What we are facing today is a confluence of various forces which channel the disgruntlement of the people. You can't tell who is behind the latest rocket-propelled grenade. It could be a father whose daughter has been killed. It could be a political leader trying to gain a following. Or it could be rump Saddam. Either way, they are starting to converge. There are far more things that were different about Vietnam than there are similarities, except, perhaps, the word "quagmire." Maybe that is the only thing that is the same."

The London Observer correctly and insightfully notes that General Nash is one of the most respected and experienced figures in a generation of American warfare. Now, I hate to mention that name in front of you, Gerry, Observer, because of the organization you represent.

MR. BAKER: John, seven days into Operation Iraqi Freedom, everybody was saying, "It's a quagmire. It's a disaster. We're not getting anywhere. The opposition is much more organized. The enemy is much different from the one that we thought we were fighting." You know, "It's all going to be an absolute disaster." Two weeks later, Baghdad fell, the entire country. Let's just --

MS. CLIFT: We did pass --

MR. BAKER: Of course it's not perfect at the moment, and of course there needs to be better organization, and there will be. But please give it some time.

MR. MCLAUGHLIN: The falling of --

MR. BAKER: Give it some time.

MR. MCLAUGHLIN: The falling of Baghdad could have been a strategy of Saddam Hussein. It's the strategy of the Viet Cong; you hug the (bulk ?), you stay around the city, and you repair to the North, where you real strength is, and that's where Saddam's strength is, and there was relatively little fighting there. So he may be there with a squadron, or more than that, of his revolutionaries, of his Revolutionary Guards.

MS. CLIFT: The senators --

MR. BAKER: Yeah, maybe Adolf Hitler and other people are in there too.

MS. CLIFT: The senators who just got back from Iraq had a much closer view of the situation than you have, Gerry, and they conclude that all of the warnings of the past year are now coming to pass. And there is huge frustration on Capitol Hill that his administration has not been forthcoming about its plan. They haven't said how long they're going to stay. They haven't said are they going to pull the troops home. They haven't put a price tag on it. And --

MR. BAKER: But the --

MR. MCLAUGHLIN: Wait a minute.

MR. BAKER: Nobody's going to put a price tag on it.

MR. MCLAUGHLIN: Go ahead. Let Tony --

MS. CLIFT: -- it's because they don't dare be honest about it. That's why.


MR. MCLAUGHLIN: Tony. Tony. Tony.

MR. BLANKLEY: You can't -- you'd be an idiot to define an exit strategy when you don't want to have one yet. You don't know what the costs are. You don't know --

MS. CLIFT: Well then, give us the entrance strategy.

MR. BLANKLEY: You saw the entrance strategy. It's called victory.

MS. CLIFT: You listen to Republican Senator Lugar.

MR. PAGE: Victory at what cost? We're now firmly planted in Afghanistan and Iraq, with a very messy situation in both. And --

MR. BAKER: Of course it's messy. The war on terrorism is messy.

MR. MCLAUGHLIN: Let him finish!

MR. PAGE: Where next? And where's the credibility that we're going to have when time comes to make a move on another country or another --

MR. MCLAUGHLIN: Gerry, give me one sentence. What is your central point here; that all of this criticism is unfair?

MR. BAKER: I'm not saying that they did not make mistakes. Of course. And it is much -- and it's messy. I don't' dispute that.

MR. MCLAUGHLIN: Well, what is your point?

MR. BAKER: They are putting it right, for a start. The administrator -- the chief administrator, Paul Bremer, is doing a much better job than his predecessor, that already, despite what Clarence said, the power has been turned back on.

MR. MCLAUGHLIN: Well, that's --

MR. PAGE: (Inaudible.)

MR. BAKER: They are playing a long game, because they know that --

MR. MCLAUGHLIN: All right, Gerry. All right. I just want to understand. With regard to Burma (sic), his tragic faux pas was letting 400,000 -- 400,000 -- military loose, one-third to go to the mosques to listen to the holy men there, and God knows what they're saying; one-third to go to the fields and be farmers, and one-third to go to the streets. Without pay. Without pay.

MR. BAKER: There was going to be a vacuum straight after what happened for 30 years in Iraq, and there's going to be a vacuum, and it was inevitable that all kinds of furies would be unleashed and all kinds of problems.

MR. MCLAUGHLIN: Gerry, you can tell from that there was no planning for this. No planning.


MR. MCLAUGHLIN: Exit: How long will the U.S. military occupation of Iraq last? Gerry Baker.

MR. BAKER: It could last as long as five years, possibly even longer.


MS. CLIFT: Five years, at minimum, but only --.

MR. MCLAUGHLIN: Military occupation?

MS. CLIFT: -- but only if the U.S. can internationalize the situation. They can't let it be an American occupation much longer.

MR. MCLAUGHLIN: A military occupation.

MR. BLANKLEY: I think we're going to have what is essentially going to be a permanent military presence in Iraq. By permanent, I mean for the foreseeable future, years.

MR. MCLAUGHLIN: You're talking about 100,000, 150,000 troops?

MR. BLANKLEY: No. No, I think at some point it will come down. But we're going to garrison that area.


MR. PAGE: I agree. And that's why we've got to internationalize it, or it will be a big disaster for us.

MR. MCLAUGHLIN: The answer is closer to 10, but more than five years.

By the way, there was some good news this week. The European Union leaders met with President Bush in Washington for good, substantive and healing discussion. The president deserves congratulations for that. A three month cease-fire is in the works between Hamas and Israelis. That was probably due to a lot of U.S. pressure too. And the Saudis caught a ranking terrorist for interrogation, and in interrogation.

Issue three: prescription for change. Both chambers of Congress, the House and the Senate, in the early morning on Friday, less than an hour apart, approved sweeping Medicare prescription drug legislation. The measures give seniors a prescription drug benefit and at the same time create a broad, new role for private insurance. The government will run the program. In the House, the vote was a cliff-hanger, 216- 215, and in the Senate, 76-21.

Tony, what's the political fall-out of this?

MR. BLANKLEY: This is a potentially very large political event. The Republicans want to present to the American public that they're capable of governing. They hold the House, the Senate, the White House. Now passing prescription drugs, having done education, having done tax cuts, having fought the war successfully, a couple of wars successfully, there is a potential to take the major issues off the table for the Democrats.

The Democrats are in agony at having to embrace it. Daschle initially opposed it. Kennedy came out in favor of it, and then Daschle had to do a 180 and say "I guess I'm for it, but we have to improve on it."

MR. MCLAUGHLIN: So what's the bottom line?

MR. BLANKLEY: The bottom line is, assuming it passes in final form, that this is a very large victory for Republicans.


MR. MCLAUGHLIN: We'll be right back with predictions.


MR. MCLAUGHLIN: Predictions. Gerry?

MR. BAKER: The U.S. dollar, which has fallen already very sharply this year, will fall much further, which is good news for the American economy, bad news for the rest of -- (inaudible).


MS. CLIFT: Wesley Clark, former NATO commander, will enter the presidential race as a Democrat.



MR. BLANKLEY: The economy will continue not to be producing the level of jobs people would hope for.


MR. PAGE: Congress will follow up the "no-call" list for telemarketers with a "no-call" list for spammers.


MR. PAGE: It will be a wonderful thing, yes.

MR. MCLAUGHLIN: I predict the energy bill that has been sidelined on and off will be passed by both the House and the Senate before the August recess.

Happy 4th! Bye-bye.



MR. MCLAUGHLIN: Issue four: Sharing is everything.

The recorded music industry is under siege by Internet music listeners. They don't want to pay for their favorite songs. They get them free now on the World Wide Web, and they want to keep it that way. With existing online technology called file sharing, listeners can download -- that is, install -- onto their computers music file sharing programs, such as Kazaa or LimeWire or Morpheus. It's all free. Once downloaded, the program allows users to share the songs in their computer with other users who are logged on to the same sharing system. All three are wildly popular, Kazaa being the most so, boasting 4 million users at any time during the day.

Obviously, this exacts a terrible revenue toll on record companies. Profits evaporate. But file sharers say that record companies make too much money anyway and they overcharge for CDs and they offer too few choices. This week, the Recording Industry Association of America, RIAA, threatened to bring a suit against individual users who have the largest collection of songs stored in their computers. The RIAA says that file sharing is piracy, cyber piracy, and it is copyright theft.

Now get this: At the same time, RIAA music moguls are offering a constructive and legal alternative. These record companies, in collaboration with computer giants -- Apple, Microsoft, AOL, Amazon -- are offering audiophiles better cyber music, they say, than the file- sharing programs, and at a very affordable cost.

Question: Does the RIAA have a legitimate beef, or are they whining crybabies?

Gerry Baker?

MR. BAKER: I love this. This has to be one of the great acts of folly. Have you ever heard of companies suing their own customers? (Laughter.) This is essentially what it comes down to. They -- this is an unbelievably crazy move, which will fail completely, and they have to get their act together. And you know, what you mentioned there, some companies are starting already to kind of figure out ways of dealing with this. So, I understand this problem, this copyright problem they have, but the answer is not to sue your own companies (sic); I mean, that's --

(Cross talk.)

-- your own customers, that will just -- (word inaudible) -- disaster.

MS. CLIFT: Well, they make -- they make a compelling case for intellectual property rights, but it is too pervasive. Everybody does it, ask any 15-year-old or any 50-year-old, for that matter. So, preventing it is like trying to hold back the tides. They're going to have to find a way to embrace the technology and come up with a new market model. And I'm sure they're going to figure out how to do it.

MR. MCLAUGHLIN: Now, you all caught that wrinkle that they are offering users -- Microsoft, AOL and Apple -- to produce the same kind of music at about 99 cents each selection.

MR. PAGE: Right. Better quality -- (inaudible) --

(Cross talk.)

MR. MCLAUGHLIN: Well, if they can drive off the air the three biggies who will make it now free, then they drive them into AOL, Microsoft and Apple.

MR. PAGE: Yeah, right. But the model is not working that well right now. And it might work better to have a subscription model than to do it one tune at a time. But they need to work on that.

MR. BLANKLEY: Yes. Plus, it's also hard to compete price-wise with free -- (chuckles) -- and although that's --

MS. CLIFT: Right.

MR. MCLAUGHLIN: What's wrong with free? Are you opposed to freedom?

MR. BLANKLEY: When it's theft, yeah, I'm against it. (Laughter.) The only good part of this is it may drive the record business out of business, and we don't have to listen to that terrible music. (Laughter.) But that's only --

MR. PAGE: Not a chance!