QotW3: File Sharing - Innocent or Guilty?

The person who declared the best things in life are free might have very well included MP3s and file sharing networks. Mention downloading of music to any peer around you and chances are, every single one of them are guilty of file to file sharing at some point.

Peer-to-peer is now the common term used to describe Internet file-sharing services. The name derives from the underlying structure of the Internet, in which various computers store information and other computers retrieve it through interconnected networks. With P2P, all computers sharing information over the Internet are "peers" because they both store and retrieve information.

P2P technology enables computer users to share this information through communications, processing power and data files with other users. Use of P2P technology can yield significant benefits such as enhancing efficiency by allowing faster file transfers, conserving bandwidth and reducing storage needs. Businesses, government agencies, academic institutions use P2P applications for a variety of tasks. However, the most common application by far is commercial file-sharing software programs used by consumers to exchange files such as music and movie files with others; information presented in the FTC’s report indicates that tens of millions of individuals have used a P2P file-sharing program. (Douglas, 2004)

The majority of P2P services' users trade digital copies of songs and to a lesser extent, movies. Though there is nothing illegal about the technology itself as it can be used to share any type of digital file, such as personal photos or text files, many of the files traded through P2P networks are copyrighted. It is the unauthorized "sharing" of these copyrighted materials that has stirred the P2P controversy. A heated public debate started when the original file-sharing service, Napster, went online in 1999. Napster was shut down in 2001 but the debate raged on as other file-sharing services swarmed in to take its place.

Here in the information age, virtually all intellectual creations can be protected by some form of intellectual property law. Intellectual property divides the universe of intellectual creations into three domains: copyrights, trademarks and patents. In a nutshell, copyright protects expression, trademark protects names and patents protect ideas.

The Copyright Act of 1976 states that the items of expression can include literary, dramatic and musical works, pantomimes and choreography, pictorial, graphic and sculptural works, audio-visual works; sound recordings and architectural works. An original expression is eligible for copyright protection as soon as it is fixed in a tangible form. (Liebowitz, 2002)

With this in mind, music companies immediately pointed fingers at the dramatic growth of file sharing among individuals who search, share, and download music files from each other as sales of recorded music drop. In fact, a study headed by Oberholzer-Gee found that for the most popular albums in the top 25 percent that had more than 600,000 sales. File-sharing actually boosts sales. Despite predictions that the Internet would level the playing field of the music industry, giving consumers equal access to underground and independently produced artists as to chart-topping pop darlings, music downloads parallels music sales. (Pottier, 2004)

Oberholzer-Gee poses several theories on the slack pace of music sales. From what he calls the "CD replacement boom" winding down as listeners have evolved from replacing their vinyl with CDs, to the rising price of CDs and finally to MP3 downloads. Despite the initial surprise at the results of their study, it makes clear economic sense that every download does not displace a CD sale. As the proliferation of digital media and the ease of disseminating it churn on, it drives the discussion of property rights into the courts, making economists take notice. The fine line between granting sufficient protection of intellectual property to spur creation yet not requiring such stringent protection that market forces will be choked, is as important to economists as to lawyers.

Napster has proven that dealing with file-sharing networks with an iron fist is not the way to go. One goes down only to have multiple clones rise up from its demise. Just like charging culprits for downloading illegally, there are millions that slip through the net. Instead record companies should learn to tweak file-sharing to the best of their advantage. If you can’t beat them, at least, learn to play with them.

Reference:

Guy Douglas (March, 2004). “Copyright and Peer-to-Peer Music File Sharing”. Retrieved February 3, 2007 from http://www.murdoch.edu.au/elaw/issues/v11n1/douglas111.html

Stanley J.Liebowitz (June, 2002). “Copyright Issues, Copying and MP3 File-Sharing”. Retrieved February 3, 2007 from http://www.utdallas.edu/~liebowit/intprop/main.htm#me

Beth Pottier (April 15th, 2004). “File-Sharing May Boost CD Sales”. Retrieved February 3, 2007 from http://www.news.harvard.edu/gazette/2004/04.15/09-filesharing.html