The most recent Supreme Court ruling on this controversial issue was in the case of MGM v. Grokster.  Reversing the opinions of both the district court and the Third Circuit, the Supreme Court found that, though the software could be used for both infringing and non-infringing purposes, the companies “induced” its users to infringe copyright.  Even though the software may have had substantial non-infringing uses and may thus have passed the Sony test, the court unanimously felt that the software was created with the intention of allowing users to infringe copyright for the profit of the company .  While these file-sharing networks were shut down as a result of the ruling, the government did not seek prosecution of users, many of whom had shared less than $1000 dollars worth of copyrighted works and were thus not criminally liable under the current U.S. code.  And while the government may have had a shot at prosecuting the creators and marketers of the software itself, as their product had been found to induce copyright infringement, with damages likely totaling thousands of dollars, a federal case was never made of it.  Grokster was shut down, and numerous file-sharing networks popped up in its place, while legal digital distribution networks gained popularity as well, filling the gap left by the popular illegal networs.  The war on piracy continued despite this dramatic ruling, and the complaining on behalf of the record companies has yet to cease.

Though peer-to-peer file sharing has yet to be legislated, the courts have provided us with some guidance on how to deal with the new technology.  The most recent revision to copyright law dates back to December of 1997, a year and a half before the release of Napster, the first mass file-sharing network.  The No Electronic Theft Act (the NET Act) was designed to close a loophole in criminal law that prohibited prosecution of people who distributed copyrighted software over the Internet without making a profit.  The NET amendments included a new provision that made "reproduction or distribution, including by electronic means, during any 180-day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a total retail value of more than $1,000" a criminal offense, punishable under United States code by imprisonment of up to one year or fines.  Under this new law, reproduction and distribution of copyrighted material with total retail value under one thousand dollars remained a non-criminal offense unless the copyright was infringed for the purposes of commercial or financial gain. Importantly, this amended law does not allow for criminal prosecution of downloaders who do not distribute copyrighted works, but merely download them.  Obviously, without people distributing the works, there would be nothing for these non-sharers to download, and while it seems that cutting off the supply chain could effectively stop these people from downloading, this has yet to occur.  The closest parallels to a possession of unlicensed copyrighted material are laws prohibiting the possession of stolen goods (not intellectual property.)  However, Dowling shows us that property law cannot be used to prosecute offenders that copyright law does not apply to (e.g. transportation of “stolen” intellectual property over state lines).  This means that the targets of RIAA scare campaigns are actually often not committing a felony by downloading music, a fact that the RIAA is negligent to admit.

In the later chapters of the book, Hinduja utilizes crime theories in effort to discover why people participate in illegal file sharing. While much of his analysis is similar to the suggestions of other piracy studies, he makes one interesting proposal that is worth noting: “Even if [the students] do view downloading and shoplifting in a similar light, it is also possible that the former is considered a “smarter” and more admirable crime, and therefore attracts much more participation.” He does not provide further inquiry into the suggestion, but it still provides an interesting perspective on the issue.

Hinduja also proposes that a new business model must be developed that takes advantage of the digital dissemination of music. He also suggests, as many supporters of a new business model would contend, that if a new model had been created and implemented immediately following the explosion of the MP3 phenomenon, the industry may have grown tremendously during this period (not to mention the negative reputation that their anti-piracy campaigning has bought them).

Hinduja also provides anecdotal evidence supporting the success of online music distribution in establishing loyal fans and further sales. He mentions Tom Petty’s distribution of free full-length MP3 tracks from his 1999 album prior to its release in exchange for access to email addresses of fans. This produced a database of Tom Petty fans that was easily accessible for marketing uses.

Perhaps the most important suggestion in this section of the book is that a “more harmonious relationship with the consumer population should result as the industry demonstrates that they are willing to work with the public to satisfy their music needs…rather than opposing any change to the status quo.” This statement is exactly what my thesis is all about, a new less-brash response to file sharing by record companies who have a lot to gain from acceptance of the new technology.

In Chapter 5 of Lessig’s book, he presents both sides of the piracy argument, yet suggests that p2p sharing is unlike true piracy and that there is potential to create a way to protect artists and allow the sharing to survive. Lessig proposes that four types of sharing occur on p2p networks, only one of which is legal, though three of the four remain beneficial to society despite their technically infringing nature. Lessig posits that the benefits of these three non-harmful piracy methods may outweigh the harms of type A sharing, and cites numbers released by the RIAA itself to support his argument. In 2002, the RIAA reported that CD revenues had fallen 6.7 percent, falling from 882 million CDs sold to only 802 million. During this same time period, the RIAA estimated that 2.1 billion CDs were downloaded for free, about 2.6 times the number of CDs sold. However, Lessig points out that, if every download were a lost sale, then the industry would have had a 100 percent drop in sales, not the mere 6.7 percent drop reported. Based on this data, Lessig concludes that there is indeed a huge difference between downloading a song and stealing a CD, a fact the RIAA does not want students to know.

Lessig also criticizes the RIAA’s demand that Napster be able to filter out 100 percent of infringing content when Napster was only able to promise 99.4 percent. He suggests that the war is not on copyright infringement but on file-sharing itself, with copyright used as an excuse. Under the zero-tolerance policy demanded by the RIAA, we wouldn’t have VCRs, or Xerox machines, neither of which seem so harmful today. Lessig does not promote piracy, but suggests that its detractors allow the technology of the internet to develop before pouncing on the technology and preventing it from maturing to its potential. This means that the anti-piracy scare campaigns and pressure for swift legislation go by the wayside while the internet reaches its full potential and an efficient way to promote and distribute content is developed.

Though this book is biased against internet file sharing, it provides a good background on some of the issues that arise when dealing with the topic.  Hinduja provides a difference between file sharing and CD stealing that neither the detractors nor supporters of file sharing had thought to mention, perhaps because it is so obvious.  Theft of digital property over the Internet is much easier and quicker than physical theft.    He goes on to attempt to liken the two, claiming that the desire to innovate and develop creative works can be stifled if the rewards are less than anticipated, but there is a clear argument against this.  That is, most artists struggle for years making absolutely no money before “making it,” and even then there is no guarantee of survival.  These artists cannot anticipate that the returns will be high, because the likelihood of this to be the case is so low.  It is in fact, these artists who struggle for years for no money who benefit from file sharing, as it enables them to share their work and develop a fan base without the stifling influence of a giant record label.  Thus, for these artists, the same harmful peer-to-peer network that supposedly squelches the desire to innovate actually stimulates it.  It provides the possibility that their work will be heard, which would otherwise be unlikely.

Though the author is against file sharing, he admits that digital intellectual property is characterized as a public good.  Its utility is not decreased when the property is shared.  It is also an “information good,” with a marginal cost of production of about zero.  Though the author describes these factors as augmenting the attractiveness of the commodity, he informs the reader that because of the attractiveness, the music industry refused for years to embrace the format changes and introduce it into their business model.  This seems at first to make little to no sense, until we consider the historical resistance to change in this industry. 

Hinduja further describes the government’s general resistance to legislate on the matter of punishment for copyright infringement, suggesting that a reason for this is that most individuals lacked the capacity to violate the laws.  This is no longer true, and perhaps the government should step in and make their position on the matter known.  This potentially contradicts Lessig’s argument that the technology must develop before rules are made concerning its use. 

 

In this short but informative article, the Chronicle of Higher Education describes the RIAA’s back to school video campaign on college campuses. Though the article is clearly biased against the RIAA, it makes important points about the falsities that the RIAA campaign presents to college students as truths, citing the critics including the Consumer Electronics Association and Public Knowledge. The video tells students to beware of anything free, ignoring fair-use laws that allow students to copy music for productive, scholarly and home use (fair-use rights that the RIAA would take away as quickly as they could find a DRM code that doesn’t destroy computers). This article provides a nice companion to “Combating Internet Piracy on College Campuses,” the statement of RIAA president Cary Sherman to the House of Representatives Education and the Workforce Subcommittee later the same month. Though the RIAA is clearly making productive advances in accepting and finding a way to use technology productively (iTunes is a good example), the complaining about piracy has not ceased. In his statement, Sherman denounces colleges for not doing enough to stop piracy on campuses, alleging that the new online marketplace that the recording industry has integrated into its business model is threatened by the toleration on campuses of illegal file-sharing. Sherman offers to university administrators the same bogus anti-piracy website lauded in the video, www.Campusdownloading.com. It seems that, despite a moderate embracing of the internet by the recording industry, the scare tactics remain, both to college students and the colleges themselves.

It is no secret that the biggest threat to today's music industry is peer to peer file-sharing, labeled piracy by its detractors. It is also indisputable that most of the activity on such networks is an infringement of the copyrights held, for the most part, by the record companies that seek to stop such sharing. The Recording Industry Association of America (RIAA) is at the forefront of the anti-piracy campaign. While campaign material threatens college students and other infringers with criminal convictions and hefty government fines, the reality is that most piracy litigation has been civil, not criminal. Moreover, according to copyright legislation, it is the distribution of the copyrighted material, not the possession of it, which is punishable by Federal Laws. File-sharing is not, as the record companies would lead us to believe, always and indiscriminately, stealing. While it would be difficult to argue that file-sharing is legal, it is worth noting that the RIAA itself has engaged in unethical and dishonest campaigning in its own effort to maintain its current business model in the face of inevitable change at the hands of the new technology. It may in fact be in the recording industry's best interest to embrace file-sharing, as recent studies have suggested that the new technology may provide a better predictor of record sales than other previously popular methods, including radio airplay. In order to make the most out of the innovations that the Internet and the proliferation of MP3 technology have provided, the recording industry should shift its focus away from stopping illegal file-sharing and towards providing and taking advantage of the benefits of a legal file distribution method.