Music File SharingMusic File Sharing

Caitlin SmithCaitlin Smith

Stewart RutledgeStewart Rutledge

Jess CulpeperJess Culpeper

Music File SharingMusic File Sharing

What is it?What is it? Where did it start? Timeline.Where did it start? Timeline. Impact File Sharing as on the Music Impact File Sharing as on the Music

Industry and the consumerIndustry and the consumer Current ways of music file sharing.Current ways of music file sharing. Illegal and legal ways of file sharing.Illegal and legal ways of file sharing.

What is Music File SharingWhat is Music File Sharing File Sharing - the process of direct or indirect data sharing on File Sharing - the process of direct or indirect data sharing on

a computer network with various levels of access privilegea computer network with various levels of access privilege

Copyright - the exclusive right to make copies, license, and Copyright - the exclusive right to make copies, license, and otherwise exploit a literary, musical, or artistic work, whether otherwise exploit a literary, musical, or artistic work, whether printed, audio, video, etc.printed, audio, video, etc.

Intellectual Property - A product of the intellect that has Intellectual Property - A product of the intellect that has commercial value, including copyrighted property such as commercial value, including copyrighted property such as literary or artistic works, and ideational property, such as literary or artistic works, and ideational property, such as patents, appellations of origin, business methods, and patents, appellations of origin, business methods, and industrial processes. industrial processes.

P2P - Peer to peer allows internet users to transfer files P2P - Peer to peer allows internet users to transfer files directly, rather than through the use of a website or directory. directly, rather than through the use of a website or directory. File transfers are done directly from the users' computers. File transfers are done directly from the users' computers.

Where did it start?Where did it start?

July 1999, Napster was available to the publicJuly 1999, Napster was available to the public 2000, Metallica, Dr. Dre, and Madonna all filed 2000, Metallica, Dr. Dre, and Madonna all filed

lawsuits against Napsterlawsuits against Napster Claims were:Claims were:

1. That its users were directly infringing the plaintiff’s copyright.1. That its users were directly infringing the plaintiff’s copyright.2. That Napster was liable for contributory infringement of the plaintiff’s 2. That Napster was liable for contributory infringement of the plaintiff’s copyrightcopyright3. That Napster was liable for vicarious infringement of the plaintiff’s 3. That Napster was liable for vicarious infringement of the plaintiff’s copyrightcopyright

26.4 million users worldwide in February of 2001 26.4 million users worldwide in February of 2001 July 2001, Napster was found against on all July 2001, Napster was found against on all

three claims. Napster is shut down.three claims. Napster is shut down. Napster declared bankruptcy in 2002 and sold Napster declared bankruptcy in 2002 and sold

it’s assets.it’s assets.

TimelineTimeline 1998 MP3.com is founded1998 MP3.com is founded Diamond Multimedia ships Rio PMP300 selling at $250Diamond Multimedia ships Rio PMP300 selling at $250 October 1998, RIAA call the Rio a toll of copyright infringement. October 1998, RIAA call the Rio a toll of copyright infringement.

Diamond Multimedia wins case.Diamond Multimedia wins case. June, 1999 Napster is released (begging of peer-to-peer file sharingJune, 1999 Napster is released (begging of peer-to-peer file sharing December, 1999 lawsuits filed against NapsterDecember, 1999 lawsuits filed against Napster March, 2000 Gnutella is publishes (first decentralized file sharing March, 2000 Gnutella is publishes (first decentralized file sharing

system)system) October, 2000 Napster is credited by driving curtains albums up on the October, 2000 Napster is credited by driving curtains albums up on the

Billboard charts.Billboard charts. March, 2001 FastTrack and Kazaa are introduced.March, 2001 FastTrack and Kazaa are introduced. July, 2001 Napster shut downJuly, 2001 Napster shut down August, 2002 P2Pnet is founded. Will grow to become one of the most August, 2002 P2Pnet is founded. Will grow to become one of the most

popular media sitespopular media sites October, 2004 RIAA files 750 lawsuits aimed at alleged copyright October, 2004 RIAA files 750 lawsuits aimed at alleged copyright

violatorsviolators June, 2005 US Supreme Court judges Grokster developers guilty of June, 2005 US Supreme Court judges Grokster developers guilty of

encouraging copyright infringementencouraging copyright infringement September, 2005 WinMX shuts down after cease and desist from the September, 2005 WinMX shuts down after cease and desist from the

RIAARIAA 2006, major music file sharing crackdown in Sweden.2006, major music file sharing crackdown in Sweden.

Who is trying to stop the Who is trying to stop the crimes?crimes?

Recording Industry Recording Industry Association of America Association of America (RIAA)(RIAA)

What the RIAA doesWhat the RIAA does What is the RIAA’s What is the RIAA’s

official stance on official stance on digital music piracydigital music piracy

How much does the How much does the RIAA estimate that the RIAA estimate that the recording industries recording industries are losingare losing

Impact of File Sharing On the Impact of File Sharing On the Music Industry & ConsumerMusic Industry & Consumer

Financial ImpactFinancial Impact

Impact to the ArtistImpact to the Artist

Impact to ConsumerImpact to Consumer

Financial ImpactFinancial Impact

Common questionCommon question

Consumer’s concernConsumer’s concern

Artist/Record Label’s concernArtist/Record Label’s concern

Financial ImpactFinancial Impact

CD Sales are Down 15%CD Sales are Down 15%

Digital Music Sales are Up 49%Digital Music Sales are Up 49%

iTunes 3iTunes 3rdrd with 9.8% of Market Share with 9.8% of Market Share

Digital Music Sales estimated to gross 2.7 Billion Digital Music Sales estimated to gross 2.7 Billion

by end of 2007 by end of 2007

Projected Future Financial Projected Future Financial ImpactImpact

Analysts predict that by 2012 over a Analysts predict that by 2012 over a Third of all music sales will be digitalThird of all music sales will be digital

It is also projected that over the next It is also projected that over the next 5 years CD sales will continue to 5 years CD sales will continue to decline, and digital music sales will decline, and digital music sales will rise to over 3.4 Billion dollarsrise to over 3.4 Billion dollars

Impact to the ArtistImpact to the Artist Wide Spectrum of ArtistsWide Spectrum of Artists

Smaller Up & Coming ArtistSmaller Up & Coming Artist Wants exposure (Build fan base, concerts, Wants exposure (Build fan base, concerts,

merchandise, etc.)merchandise, etc.) Generally want their music disseminatedGenerally want their music disseminated Generally lose revenue now, but hope it pay’s offGenerally lose revenue now, but hope it pay’s off File Sharing is usually more of a positive impactFile Sharing is usually more of a positive impact

Larger More Established ArtistLarger More Established Artist Generally don’t need exposure (Already have Generally don’t need exposure (Already have

established fan base and album buyers)established fan base and album buyers) Want to make money today, there’s no payoffWant to make money today, there’s no payoff An illegally downloaded song, is just revenue lostAn illegally downloaded song, is just revenue lost Usually File Sharing is viewed more negativelyUsually File Sharing is viewed more negatively

Impact to the ConsumerImpact to the Consumer Consumer Beware! The Recording Industry Consumer Beware! The Recording Industry

Association of American (RIAA) means business!Association of American (RIAA) means business! Jammie Thomas vs. RIAAJammie Thomas vs. RIAA

Only had 24 illegally shared songs on KazaaOnly had 24 illegally shared songs on Kazaa 1 illegally downloaded is breaking the law1 illegally downloaded is breaking the law

Cary Sherman, President of the RIAACary Sherman, President of the RIAA Feels they are stemming the tide of illegal file sharing by Feels they are stemming the tide of illegal file sharing by

waging a war of lawsuitswaging a war of lawsuits Legal digital music sales up, Legal digital music sales up, 7 Million illegal file sharers in 2003, only 7.8 Million in 20077 Million illegal file sharers in 2003, only 7.8 Million in 2007 Internet/Broadband Users up from 38 Million in 2003 to 80 Internet/Broadband Users up from 38 Million in 2003 to 80

Million 2007Million 2007 37% of people new downloading music was illegal in 2003, 37% of people new downloading music was illegal in 2003,

now 73% of people know it is illegal today – Message now 73% of people know it is illegal today – Message getting out!getting out!

Impact to ConsumerImpact to Consumer

Bottom Line Impact to the ConsumerBottom Line Impact to the Consumer

• If you want to acquire music If you want to acquire music legallylegally, whether it be , whether it be

digitally or otherwise, you’re going to pay for it.digitally or otherwise, you’re going to pay for it.

• If you are going to download music If you are going to download music illegallyillegally, you may , you may

receive music for free, but you run the risk of penalty for receive music for free, but you run the risk of penalty for

doing so. It’s a simple matter of “Risk to Reward”doing so. It’s a simple matter of “Risk to Reward”

Methods of File Sharing Methods of File Sharing

Illegal MethodsIllegal Methods Potential RisksPotential Risks

Legal MethodsLegal Methods Associated CostsAssociated Costs

Illegal File SharingIllegal File Sharing

KazaaKazaa Kazaa LiteKazaa Lite LimeWireLimeWire WinMxWinMx ShareazaShareaza MorpheusMorpheus BearShareBearShare

Risks of Illegal File SharingRisks of Illegal File Sharing

MalwareMalware Negative Effects on PCNegative Effects on PC

Potential LawsuitsPotential Lawsuits Case PrecedentsCase Precedents

MalwareMalware

Designed to infiltrate Designed to infiltrate or damage a or damage a computer system computer system without the owner's without the owner's informed consentinformed consent

Examples: Computer Examples: Computer Viruses, Worms, Viruses, Worms, Trojan Horses, Trojan Horses, Spyware, AdwareSpyware, Adware

Lawsuits: RIAA vs. You?Lawsuits: RIAA vs. You?

Interscope vs. Interscope vs. Rodriguez (Sept. Rodriguez (Sept. ’07)’07) Southern California Southern California

court found in favor court found in favor of the defendantof the defendant

Judge ruled that Judge ruled that “information & “information & belief” of file belief” of file sharing was not a sharing was not a sufficient claimsufficient claim

RIAA vs. ThomasRIAA vs. Thomas

Minnesota Oct. ’07 Minnesota Oct. ’07 – Jammie Thomas – Jammie Thomas found guilty of file found guilty of file sharing 24 music sharing 24 music filesfiles

First Jury VerdictFirst Jury Verdict Total Fine: Total Fine:

$222,000 (9,250 $222,000 (9,250 per song)per song)

Legal File SharingLegal File Sharing iTunesiTunes

.99cents per song.99cents per song Limited PC Accessibility Limited PC Accessibility

NapsterNapster 9.95 per month9.95 per month Extra programs Extra programs

requiredrequired Yahoo MusicYahoo Music

71.88 per year /5.99 71.88 per year /5.99 monthmonth

Subscription required to Subscription required to access songsaccess songs

MTV.comMTV.com FreeFree Limited selectionLimited selection

In ConclusionIn Conclusion

The “good ol’ days” of file sharing The “good ol’ days” of file sharing are gone – aka Napsterare gone – aka Napster

Don’t mess with the RIAADon’t mess with the RIAA One way or another, file sharing is One way or another, file sharing is

going to cost you.going to cost you.