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The battle between Web-surfing music fans and the bands they love took an ugly turn on May 3, when big-name heavy-metal group Metallica released the screen names of 335,000 Napster users, whom it alleges have broken copyright laws by using Napster's file-transferring service to trade MP3 versions of Metallica's music over the Internet.
Metallica and "gangsta rapper" Dr. Dre, among other artists, have filed lawsuits against the fledgling Internet music company and, in the process, formed an unlikely alliance with the Recording Industry Association of America. By attempting to shut down Napster or collect massive damages for copyright infringement, the musicians hope to send a message to the public that downloading copies of their music on the Internet is not O.K. and that technologies such as Napster should be more carefully monitored and controlled. "You can't build an industry on theft. That's true of the music industry and the software industry," says Dave McClure, executive director of the U.S. Internet Industry Assn.
But the legal jousting over online music and the ensuing media frenzy may be missing a bigger picture. While Napster is now synonymous with Internet music, nearly a dozen other companies are offering even more sophisticated file-transferring tools. Furthermore, many of these so-called "Napster clones," such as Gnutella, CuteMX, and iMesh, allow users to share, not just MP3 music files but any type of data file that they choose to make available to other members of these services' so-called user communities. Software, digital images, videos, stories, anything stored on any computer -- all are now fair game for swapping over the Net.
10 MILLION USERS.
These programs, some of which predate Napster, have grown so easy to use that even the technologically challenged can successfully operate them. And their user bases are growing wildly. Industry insiders estimate that more than 10 million people around the world now use file-sharing programs, vs. less than 1 million a year ago. That may well be a
conservative estimate, since the number of users of Napster, Gnutella, and another program called Hotline alone may eclipse that.
The rapid proliferation of file-sharing programs represents a profound shift in who has the most information and power on the Internet. An ever-changing array of individuals with desktop PCs are potentially now more powerful and have access to more information than do the big corporate sites. "It's the opposite of what databases are intended to be. It's hundreds of thousands of people accessing potentially millions of files at any given time. It's really 'out there,'" says Brian Christal, vice-president for marketing at GlobalScape, the San Antonio (Tex.) software company that makes and distributes CuteMX.
Unlike Napster, Gnutella avoids using central servers to direct traffic and match requests for files
Particularly thorny is the issue of Gnutella, a rogue program built by America Online engineers but disavowed by the company just hours after it appeared on the Internet. The system's revolutionary architecture makes it impossible to track usage or identify participants as they exchange data over the Internet.
Here's how: Gnutella shoots file requests from computer to computer through a Byzantine informal network of users. The system avoids using central servers to direct traffic and match requests like Napster or CuteMX do, nor does it collect statistics on requests for files. (In fact, few of the file-sharing program companies collect any statistics on requests, as part of their pledge to respect their members' privacy.)
Gnutella also has no obvious distribution center nor any true responsible management structure: Ad hoc groups of hackers have put up several download points, keeping the system alive on the Net after AOL banished it. Indeed, Gnutella is not a true business since it doesn't seek profit -- in contrast to file-sharing companies such as CuteMX and Napster, which do plan to start garnering revenues either by licensing their technology or by setting up distribution deals with intellectual-property (IP) holders.
"LEGAL ALTERNATIVES."
Whether business likes it or not, Gnutella and its ilk are forcing a debate over what constitutes theft of copyrighted material on the Web. "Part of our message to the industry is, we must give consumers options. If you don't endorse some legal alternative, you will have an avalanche of file-sharing facilities without any safeguards," says Michael Robertson, CEO of MP3.com, another popular Internet-music company. MP3.com is already battling a federal judge's ruling late last week that it's engaging in copyright infringement.
The stakes are huge. The music business posted sales of $14 billion last year in the U.S. and is looking to protect that now-precarious franchise. Throw in software, videos, and, eventually, books, and the numbers quickly mount into hundreds of billions of dollars. The Business Software Alliance (BSA) estimates that worldwide losses from software piracy hit $11 billion in 1998 -- a figure that could easily mushroom as pirating software gets easier, thanks to file-sharing programs.
Beyond a forced march to new business concepts, the astounding growth of file-sharing programs has set the stage for a legal battle royal. On one side stand the recording companies and other IP holders who claim that not only are the individual users who trade copyrighted materials guilty but also the companies that provide them with the technology to do so. The industry holds significant lobbying clout and has strongly influenced legislation in this arena, in particular, the Digital Millennium Copyright Act, which extends and reinterprets existing copyright protection on the Net. Advocates claim the law could be the foundation of a new legal framework for the Internet Age.
Companies such as GlobalScape claim they should enjoy the same legal protection that phone companies and ISPs get
On the other side is the open-source movement, a hacker and teen-fueled groundswell that holds all music should be free and espouses the development of new business models to suit the Digital Age. Somewhere in between stand companies such as GlobalScape, which claim they should enjoy the same legal protection that exists for phone companies and Internet service providers. "The operative question is: Should this be treated like the phone lines, where a company is not responsible if someone uses the phone for gambling or stalking," says Constance Bagley, a visiting professor at Harvard Business School and an expert in IP issues.
Napster, which traffics solely in music files, might find it rough going to prove it has not knowingly abetted infringement of copyrighted property. The company denies culpability and cites its policy of asking IP holders to notify Napster of any theft complaints. Should the complaints bear out, Napster will either warn or revoke the use privileges of the offending party, the company says. What if it has to cut off the 335,000 users Metallica has identified? Many legal experts right now feel Napster will likely lose this case.
DOWNLOADER'S DREAM.
The more versatile programs, like CuteMX and Gnutella, could prove far trickier to litigate. Here, users start sharing everything from family photos to unpublished novellas to commercial software in what amounts to an extension of e-mail or telephone communication.
Take Mark Logusz, a 23-year-old Detroit resident who started using Napster last October. At first, Logusz wanted to find MP3 files. But he quickly dumped Napster for CuteMX. He liked that program's more advanced ability to share all types of files, so he could not only get music but also share other files on his home and work computers over the Web. "Every computer geek in the world who has ever tried to download something from the Internet has dreamed of a program just like this," says Logusz, who found CuteMX so easy to use that he even recommended it to friends who are far less proficient than he is with computers.
With so many lawsuits pending, the music industry is largely keeping mum on the topic and letting the artists speak out for themselves. The RIAA declined to comment for this story, as did Sony Music Entertainment Inc., an RIAA member and the world's No. 2 music company.
Meanwhile, various efforts to better control the distribution of copyrighted materials continue to move forward. They range from digital "watermarking" technologies to embedded chips in computers and other information appliances that act like meters checking and regulating the flow of copyrighted information. "This is the high-water mark of the Web free-for-all," says Jonathan Zittran of Harvard Law School. "From now on, the tools will be oriented toward helping the publishers protect their intellectual property."
BIG NUISANCE.
Zittran believes that the IP holders will soon make it difficult enough to copy information that the average fan will get discouraged. That fits in with traditional approaches to IP theft, which target not individuals but sophisticated pirates who widely disseminate stolen IP or corporations that use pirated goods. "They're not even worried about the hacker types. They're worried about the Ricky Martin fans who are not real technophiles. They want to make them go out and buy the album," says Malcolm Maclachlan, a senior analyst at International Data Corp.
But even with more sophisticated monitoring technology, it may be difficult -- if not impossible -- to stem the flow of file-sharing. Younger Americans are now more tech-savvy than ever before, and few of them feel any qualms about downloading pirated music or software. One poll taken by the BSA found that Americans believe speeding or lying to be worse offenses. And the draconian step of imposing government monitoring of these exchange sites would likely bring a severe backlash. "Our position is CuteMX is nothing different than e-mail," says Sandra Poole-Christal, CEO of GlobalScape. "Does Microsoft ask what file is being moved across your computer desktop?"
"It's a dike that has sprung a million leaks. You can plug some of them, but not all"
Furthermore, the instantaneous transmission capabilities of the Internet enhance the ability of a small group of hackers to distribute vast amounts of data in a very short time. "It's a dike that has sprung a million leaks. You can plug some of them, but not all. As compression technology gets better and broadband becomes more widespread, you're going to see these issues arise again and again," says Jim Butler, an adjunct professor at Georgia Tech University who lectures on Internet law.
Consider the position of Robin Gross, a staff attorney at the Electronic Frontier Foundation in San Francisco: "You should only punish the illegal acts. You shouldn't punish the technology." If that view prevails, there indeed may never be enough thumbs to stop all the leaks in the digital dike.
Salkever is a staff reporter for Business Week Online in New York EDITED BY BETH BELTON
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