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MAY 5, 2003
By Jane Black Big Music: Win Some, Lose a Lot More? Suing music pirates may scare off a few file-sharers, but providing legal alternatives along the lines of Apple iTunes makes more sense
The Recording Industry Association of America (RIAA) may have lost the battle for the hearts and minds of music fans. But it always believed it would be a winner in one place: The courts. Until now, that is. Over the last three years, the RIAA's legal juggernaut has crushed Napster, the original file-sharing service, plus imitators like Aimster and Audio Galaxy. But on Apr. 25, the industry group's string of victories came to an end when a California federal judge ruled that popular peer-to-peer services Grokster and StreamCast could not be held responsible for the illicit trading of copyrighted music and movies over their networks. Unlike Napster, Grokster and StreamCast do not link music swappers through a centralized server. Instead, these second-generation services merely provide software that enables computer users to distribute files by connecting directly to one another's machines (see BW Online, 2/21/01, "Sons of Napster: Singing a Different Tune"). So, these services "do not have actual knowledge of infringement at a time when they can use that knowledge to stop" illicit music swapping, wrote Judge Stephen Wilson of the U.S. District Court in Los Angeles. Just as Xerox (XRX ) cannot stop its customers from making hundreds or thousands of copies of newspaper and magazine articles or books, the same goes for these music-swapping sites. The RIAA and its sister organization, the Motion Picture Association of America (MPAA), have vowed to appeal the ruling. TARGETING CUSTOMERS. Judge Wilson's decision ushers in a new era in the music industry's battle against technology. One of the main legs supporting the RIAA's strategy -- suing faceless P2P services out of existence -- has suddenly become shaky. With CD sales falling 8.8% last year, that's prompting the industry to come down hard on its customers. "They either chase the technology or the people using the technology. The record industry can't ignore piracy," says Jay Handlin, a copyright lawyer at Los Angeles firm Howrey Simon. RIAA President Cary Sherman is unequivocal: "We've been very public that stepped-up enforcement is on the table. Our research shows that the only thing that will make a difference is if there is a risk of serious consequences." The RIAA's effort to target its customers was well under way before Judge Wilson's decision. Last fall, the industry group sent 2,300 letters to colleges, pleading for cooperation from the schools' network administrators to help stamp out file-sharing on university networks (see BW Online, 11/27/02, "Music Pirates at the Naval Academy?"). SCHOOL SUITS. In January, the RIAA was handed some high-power ammunition when a federal judge ruled that Internet service provider Verizon (VZ ) must unmask a customer whom the RIAA alleged was sharing copyrighted files. And the RIAA on Apr. 3 provided a further demonstration of its revolve, when it filed a multimillion-dollar lawsuit against four college students at Rensselaer Polytechnic Institute, Princeton University, and Michigan Technological University who allegedly ran mini-Napster networks allowing users to share copyrighted music and movies. All four settled out of court on Apr. 30. Although none admitted guilt, each promised not to knowingly infringe on the music companies' copyrights. They also agreed to pay the RIAA between $12,000 and $17,000 in installments over three years. Those sums represent tough punishments for college kids, but far short of $100 million for which the students technically were liable. That stratospheric sum is the result of the Digital Millennium Copyright Act, a 1998 law that protects copyright holders with regard to digital media, and provides for a $150,000 fine for each copy of infringed material. "I don't believe that I did anything wrong," says Daniel Peng, the Princeton University student. "I hope that for the sake of artists, the larger issues can soon be resolved."
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