File Sharing of Copyrighted Work

• Do you do it?

• Is it the right thing to do?

• Can it be stopped?

A Growing Audience

• Traffic on peer-to-peer networks has nearly doubled since 2002

• Average simultaneous worldwide P2P users

• 2002: 4.9 million

• 2007: 9.4 million• source: BigChampagne

CD Sales Plummeting

• CD sales down by 20% from March 2006-2007.

• Wall Street Journal lists a number of factors contributing, including file sharing.

• slashdot.org, March 22, 2007. <http://slashdot.org/articles/07/03/22/1547252.shtml>

Has File Sharing Hurt Music Sales?

• It depends on whom you ask.

• Some economists say no.

• Oberholzer-Gee, Koleman Strumpf. The Journal of Political Economy, 2007.

• Some economists say yes.

• Liebowitz, Stan J. “Economists Examine File-Sharing and Music Sales”. The Industrial Organization of Digital Goods and Electronic Markets, 2005.

Other possible factors in declining music sales• 800 fewer retail outlets (Tower

Records' demise alone closed 89)

• increasingly negative attitude towards CD sales from big-box retailers (Best Buy now dedicates less floor space to CDs in favor of better-selling items)

• Wall Street Journal, “Sales of Music, Long in Decline, Plunge

Sharply”, March 21, 2007.

Other factors for lower sales(continued)

• Music sales may have been artificially inflated to begin with.

• People replaced LPs and cassettes with CDs. When they completed this task, sales stabilized.

• Movie sales actually up.

• slyck.com, March 6, 2007. <http://www.slyck.com/story1436.html>

Is downloading the same as stealing?

• Stealing implies that someone has been deprived of property

• Here, it’s not clear if that is always the case

• People who download often wouldn’t have bought the music anyway.

Record Companies file lawsuits.

• Not suing organized criminals but ordinary people. http://p2pnet.net/story/2206

• The defendants can’t afford to defend themselves, so almost all the cases settle, usually for around $4000.

• Boston Globe, March 8, 2007.

The record companies claim to “win” the lawsuits.

But do they really?• Illegal downloading is still rampant

• 80 million tunes were legally downloaded last December, but illegal downloads were nearly six times higher at 466 million songs.

• Boston Globe, March 8, 2007.

Are the lawsuits effective at decreasing piracy?

• Record companies say they have stabilized the problem, that illegal downloading is no longer “growing exponentially”

• Boston Globe, March 8, 2007.

Are lawsuits effective? (continued)

• Number of households illegally downloading music is down.

• NPD Group as cited in the Boston Globe, March 8, 2007.

• But those who are left are downloading more.

Should content owners be spending their money on

something else?

• Lawsuits cost much more than record companies recover.

• Record companies could probably find a way to make money embracing the technology

New technology

• New technology allows ads to be embedded in media files unobtrusively

• When a user downloads a file, an ad pops up asking if the user would be willing to view an ad in exchange for owning a legal copy of the music.

Would you view an ad in exchange for a legal

copy?

• The company marketing the technology claims that 60% of users are willing to view the ad

• Business 2.0,2 “Peer-to-Peer Music Goes Legit with Pop-Up Ads”, April 2007.

Why view an ad if you don’t have to?

People don’t really want to rip anyone off; they

just want music for free• People don’t really want to rip

anyone off. They just want music for free.

• They would view the ad just because they might as well.

Other ways for content owners to embrace file

sharing

• Flat-fee all-you-can-download services

• Other ways?

Lawsuits may be counterproductive

• If people view the copyrighted owners as the bad guys, they are less likely to care about the anti-piracy cause.

Nobody likes the RIAA

• Voted “Worst company in America” by consumerist.com, narrowly beating out Halliburton.

• http://consumerist.com/consumer/worst-company-in-america/riaa-wins-worst-company-in-america-2007-245235.php

• Making everyone hate you certainly couldn’t help the cause to stop illegal downloading

Do the record companies and others

go to far?• A company suing Apple, Microsoft,

and RealNetworks for failing to implement Digital Rights Management technology.

• news.com, May 11, 2007. http://news.com.com/Apple,+others+draw+legal+threat+over+media+players/2100-1030_3-6183105.html

Too Far (continued)?

• Digital Millenium Copyright Act

• makes it illegal “descramble a scrambled work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove, deactivate or impair a technological measure, without the authority of the copyright owner.”

File Sharing sites are defiant

• piratebay.org’s legal threats section

• Can they ever be stopped?