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File-Sharing Or Internet Piracy?

With the continuing rise of internet and digital media technologies, internet file-sharing has become one of the most important issues of the modern age. Some see this as a simple issue of theft while others see it as an opportunity to obtain artistic material that was previously unavailable to them. In either case, neither the people nor the world's governments have been able to decide when to protect the business interests of the creators and when to protect the privacy of the average internet user.

- A Retrospective -

The concept of the copyright is a simple one, however the issues surrounding it are not. Originally, copyrighting material was done to protect the publisher and artist's profit from reproduction by a third party, also for profit. Distributing a purchased copy was not considered illegal and, considering the expense involved, reproduction and distribution were not a concern. However, CD/DVD drives, scanners, and other technologies have made digital reproduction a simple process, while the internet has simultaneously increased the scope with which such material can be distributed. It is now obvious that original copyright laws are no longer sufficient to guarantee adequate returns for publisher and artist.

The clearest solution is much publicized by its proponents: to police internet “piracy” and those who are facilitating this activity. The first major target of this crackdown was MP3 provider Napster. However, in recent years, file-sharing sites and video-linking sites have been the targets for legal action by the Recording Industry Association of America (RIAA) and Motion Picture Association of American (MPAA). These sites, such as bitTorrent, The Pirate Bay, and video-linking site SideReel.com, do not host copyrighted information for distribution. Instead, they provide links for visitors to access material from both private and public servers. However, many of these sites profit from this service through advertisement making them subject to legal action. Yet many of these sites are hosted outside the United States where the laws regarding the legality of this service are subject to considerable debate. Ironically, it is the loss of advertising dollars through internet hosting that has angered television networks.

- The Arguments -

In a commissioned 2005 report, the MPAA reported that 44% of the industry's domestic losses were the result of college students illegally downloading movies.¹ As a result of this study, universities around the country have been pressured to police student activity on their servers. This pressure has extended to congressional action including the proposed College Opportunity and Affordability Act of 2007. This includes a section for “Campus-based Digital Theft Prevention,” which states, “Each eligible institution participating in any program under this title shall to the extent practicable...develop a plan for offering alternatives to illegal downloading or peer-to-peer distribution of intellectual property as well as a plan to explore technology-based deterrent to prevent such illegal activity.”² While the bill is not clear on specific repercussions should the university fail to crack down on such activity, it could be interpreted that such a failure may serve as grounds to refuse the university's incoming federal financial aid.

Claremont Graduate University visiting scholar and InsideHigherEd.com commentator, Kenneth C. Green, doubts the measure stating, “Unfortunately, the MPAA and the Recording Association of America continue to press for costly 'technology solutions' that campus IT experts have deemed both expensive and ineffective.” He continues, “Arizona State University CIO Adrian Sannier testified that his institution had spent approximately $450,000 on P2P technology deterrent software over the past six years; Mr. Sannier also described illegal P2P activity as an 'arms race' that neither side will win, an assessment affirmed by other campus CIOs testifying at the June hearing.”³

This follows on the heels of Senate Majority Leader Harry Reid's proposed amendment to the Higher Education Reauthorization Act, which would have required the creation of a list of twenty-five universities most responsible for illegal peer-to-peer file sharing to control this activity or risk losing financial aid. This measure was withdrawn after protests by university organizations such as Educause, a non-profit association “whose mission is to advance higher education by promoting the intelligent use of information technology.”⁴

As of January 23, 2008, however, the MPAA has admitted to a significant factual error in their 2005 report. The initial report that college students were responsible for 44% of domestic loss of revenue was downgraded to 15%. Accordingly, loss of revenue to this demographic changed from figures of $572 million to $195 million. Additionally, this demographic only represents 3% of illegal sharing worldwide. While the MPAA has taken responsibility for this error, they maintain that illegal file-sharing amongst college students remains a significant threat to the industry.⁵

By far, the largest offenders of illegal file sharing occur outside the United States. A 2007 report by the Business Software Alliance (BSA), published on their website at BSA.org, shows that the United States has the world's lowest software piracy rate in 2006 at 21%, while third-world countries such as Armenia (95%), Moldova (94%), Azerbaijan (94%), and Zimbabwe (91%) rank highest.⁶

While the MPAA, RIAA, BAS, and similar organizations are quick to publicize their findings regarding lost revenue, many question whether or not illegal file-sharing constitutes lost profit. The assumption seems to be that all material downloaded is material that would have been purchased. On the other hand, many claim that these files are downloaded precisely because the individual is unwilling or unable to purchase the material.

- Policing -

The means by which these organizations conduct their research and combat the problem has come under considerable scrutiny. A Google search for “BAS” will bring up a sponsored link proclaiming, “Earn up to $1 million for Reporting Pirated Software – All Confidential,” which some consider an incentive for disgruntled employees to blow the whistle on small business owners who exceed their licenses.⁷

Many internet service providers have begun policing their own customers. Time Warner Cable is beginning a download cap with different price plans enabling their customers to download up to five, 10, 20, or 40 gigabytes per month with no unlimited download option available.⁸ AT&T is in discussions with the RIAA and MPAA to use filtering technologies to examine data packets for illegal content, a practice already engaged on many college campuses, despite serious concern that examining information packets constitutes an invasion of privacy.⁹ In fact, the Federal Communications Commission is currently involved in an investigation of internet service provider Comcast for using internet technologies to disconnect alleged bitTorrent users without disclosing this practice to their customers. FCC Chairperson Kevin Martin is concerned that this may violate the net neu9trality, a stated practice of maintaining first amendment rights over the internet.¹⁰

In response to increasing concerns and pressure from the recording industry to police their customers, Verizon's executive vice president, Tom Tauke, has stated that his company will not engage in this activity: “Once you start going down the path of looking at the information going down the network, there are many that want you to play the role of policeman. Stop illegal gambling offshore. Stop pornography. Stop a whole array of other kinds of activities that some may think inappropriate.” He continues, “When you look back at the history of copyright legislation, there has been an effort by Hollywood to pin the liability for copyright violations on the network that transmits the material. It is no secret they think we have deeper pockets than others and we are easy-to-find targets.” He concludes with the assertion that “Anything we do has to balance the need of copyright protection with the desire of customers for privacy.”¹¹

- Alternatives -

Increasingly, companies and artists who have been the victims of internet file-sharing are seeking creative incentives to discourage illegal internet file-sharing by offering alternative options. Apple Inc.'s iTunes remains the preferred method for internet users to download music. Marvel Comics, in an effort to discourage illegal file-sharing of their comics, has created an online subscription option whereby customers may read hundreds of their comics online for a modest fee. Additionally, NBC, ABC, Comedy Central, and numerous other broadcasters have released full-length episodes of popular programs online with accompanying advertisements. NetFlix.com and iTunes both offer downloadable movies for rent.

In a recent advertising campaign, popular band Radiohead maintained full-rights to their album, In Rainbows, and released it for online download with absolutely no payment required, but rather asking for a donation from satisfied fans. In a show of support, 40% of downloaders paid an average of $6 per album, netting the band $3 million free of studio and printing fees. Lead singer Thom Yorke said, “[w]e've made more money out of this record than out of all the other Radiohead albums put together...” proving that the internet is a viable source of income for both artists and producers when properly utilized.¹²

Many still criticize services like iTunes that use audio and video files protected by DRM (Digital Rights Management) technology to limit the product's ability to play on multiple computers and be copied into other formats. Many customers feel that, having paid for the product, they should be able to run it at home, at work, on personal laptops, on MP3 players, in their cars, and anywhere else they wish — yet by purchasing the project legitimately, they are limited in their ability to use it.

- Are we seeing the whole issue? -

Many also see internet file-sharing as a method of procuring content that they are unable to obtain legally. Books, music, and films that have gone out of print are often accessible online. Television shows, for instance, that are no longer aired and have not received DVD treatment can be found online. One file-sharer commented anonymously, “I can read classic works of literature that have not been reprinted for over twenty years because the rights are being disputed in court, or I can watch a TV show that had a profound impact on me as a child. I can't obtain these legally, and it's a part of my culture. I think depriving people of their culture is unconscionable. Sure, I think production companies and, more importantly, artists, should profit from their work, but not at the expense of our culture.”

File-sharers grow increasingly concerned that the media empires, such as Time Warner, use their news media outlets to promote the term “internet piracy,” rather than the neutral “file-sharing” to create public support for their position while using their deep pockets to lobby congress into action. Alternative viewpoints are then relegated to internet websites such as ZeroPaid.com, which tracks developments in file-sharing news, and private conversation. “At the very least,” says one such file-sharer, “the major media outlets are not giving file-sharers a voice because they see it as an affront to their business, but any issue this important deserves serious, open discussion before legislation is passed.”

- What Now? -

The entertainment industry and internet privacy advocates are locked in a long battle fighting for the support of the people and their elected representatives. Perhaps the one thing everyone can agree on is that it is time to change the way we look at electronic media. Change is slow and cautious, but professionals are realizing that the internet is becoming the single most important distribution method available. Consequently, it may become either the source of exciting new business opportunities or it may spell the end of the entertainment industry as we know it.