Essay

Are recording companies over reacting when it comes to ‘illegal downloading’?

In the early 80s major recording companies coined the phrase “home taping is killing music” (McLeod, 2005, p521). As technology has progressed, the major labels are now faced with a global epidemic of peer-2-peer file sharing. Music websites such as the original Napster site, LimeWire and Grokster have led the way for the public to download music of their choice at no cost what so ever. As a result of this, record companies have taken the battle for higher profit margins to the courts, bringing legal action against ‘illegal downloader’s’ wherever they can. This paper will discuss the rise of peer-to peer file sharing and how it has changed the music industry. This paper will also look at how record companies have reacted in response to illegal downloading and whether their reaction is reasonable.

Since the introduction of Napster (the original) to the internet, using peer-2-peer (P2P) file sharing to download files has become a major activity of net-savvy users. Napster was the first of many peer-2-peer based networks that allowed users from every corner of the world to download music MP3 files for free, sparking outrage and concern within the music industry. This reaction was justified, as consumers now had an automated way to copy copyrighted material, will little chance of being caught. (http://computer.howstuffworks.com/napster.htm).

McLeod (2005:526) argues the music industry brought the downloading debacle on itself through the distribution of music on compact discs. He argues that the selling of CDs resulted in higher profits, but, allowed fans to easily ‘burn’ songs onto their computers and put music files on the internet. Compression technology is what made this process practical to send audio files over the internet. File compression “squeezes” files to one-twelfth of their original size or possibly smaller with no noticeable sound quality loss (http://computer.howstuffworks.com/napster.htm). The MPEG-1 audio layer3 or MP3 s one type of compression format, with other types of file compression including AAC and WMA (Kowalski 2004:31). Along came P2P file sharing which works by individual users connecting to a central server which keeps an index of user’s online, connecting users to one another (www.kazaa.com).

As P2P file sharing became increasingly popular the concerns over piracy and infringement of copyright laws increased dramatically. This resulted in the Recording Industry Association of America (RIAA) seeking legal action against websites such as Napster. The RIAA claims that file sharing (of music files) is unauthorized copying or theft of intellectual property which has serious legal consequences (Kowalski 2004:32) The RIAA has launched legal attacks on P2P music sharing networks stating that websites such as these cost the industry billions in lost profits (Hurst & Harrison 2007:287). The music industry is dominated by the ‘Big Four’, otherwise known as Sony BMG, EMI, Universal and Warner, these four companies collectively control 85 percent of global recording sales (Burkart & McCourt 2006:6). This oligopoly of the industry by the Big Four has ensured their high profitability, however, now that profit faces the challenges of new technologies which offer alternate means of distribution, resulting in a direct threat to their primary strengths (Burkart & McCourt 2006:43).

Justifying the music industries reaction to P2P downloading, a report by IFPI (Digital Music Report 2007) shows that CD sales were affected globally due to internet piracy causing sales to fall by 23 per cent in 2000-2005 (IFPI Report, 2007:18). 2003 saw the RIAA request from the Federal Court a large number of subpoenas, demanding information on Internet Service Providers (ISPs) and personal information regarding college students who pirate music (Galuszka 2004:24). More than 10,000 individuals from as many as 18 countries have incurred legal action, with the industry claiming its aim is to educate and deter (IFPI Report 2007:18).

There is support to the suggestion that record companies are over reacting to illegal downloading, with studies proving downloading music from the internet does not have a negative effect on the music industry. Researchers found that for popular selling albums for every 150 downloads from those particular albums, sales increased by one copy (McGuire 2004). A report complied by Forrester Research found consumers who download music frequently buy 36 percent of all CDs in the US market, with only 13 percent saying downloading will decrease their music purchases and 39 percent increase music purchasing due to exposure to new music (Kruger 2003). Is has also been pointed out that legal downloading through online stores such as i-Tunes, are catching up to P2P sites, with 35 percent preferring legal downloading compared to 40 percent who still illegally download. (http://www.afterdawn.com/news/archive/6558.cfm).

Many artists, who are major contributors to record company’s profits, actually believe the internet is a highly effective tool to market and create their work. Only 28 percent of musicians believe file sharing poses a threat to the music industry, with 43 percent of the opinion that “file sharing services aren’t really bad for artists, since the help to promote and distribute an artists work to a broad audience” (Dean 2004). File sharing has been the main marketing tool for independent bands, with the success leading their albums to the top of the music charts (McLeod 2005:526).

Teens and post-teens are leaders in actively downloading music as they are generally the “money poor but time-rich” (Burkart & McCourt 2006:73). Colleges are amongst those fearing lawsuits as students illegally download through their information technology systems. Since the 1998 Digital Millennium Act (US), colleges have taken a tougher stance with students towards downloading as this act liability of their online service providers, provided they address the situation once abuse is found (Galuszka 2004:24). Students as young as 12, are being sued by the RIAA for “making illegal copyrighted material freely available by uploading it to file sharing programs such as KaZaA” (Burkart & McCourt 2006:70). Many individuals that RIAA target are unable to defend themselves or settle the proposed costs incurred. The RIAA also failed to check whether they are current downloader’s with one case based on a college student downloads three years prior (Electronic Frontier Foundation 2006:6). Resistance has built amongst those targeted with many challenging the RIAA which could possible force a re-evaluation of their hard lined ‘forced to settle approach’ (Electronic Frontier Foundation 2006:7).

P2P file sharing has revolutionized the music industry and forced record companies to assess how they can maintain their profit margins. However as this paper points out, it is questionable whether the ‘big four’ are reacting to P2P appropriately. So far their approach has been to sue individuals who have little or no money, as opposed to adopting an approach similar to Apple’s i-Tune’s which has secured and offered the market a legal approach to downloading internet music.

Word count 1050

References

Afterdawn News (2005) http://www.afterdawn.com/news/archive/6558.cfm (accessed 30 April 2007)

Burkhart, P. and McCourt, T. (2006) Digital Music Wars: ownership and control of the celestial jukebox, New York: Rowman & Littlefield.

Dean, Katie. (2004) ‘Study: Musicians dig the net’, http://.wired.com/print/entertainment/music/news/2004/12/65927

Electronic Frontier Foundation. (2005) The RIAA v. The people: Two years later http://www.eff.org/share/ (accessed 1 May. 2007)

Glauszka, P. (2004) ‘The war over Internet piracy’, Black Issues in Higher Education, vol.21, iss.2, pp. 24-27

Hirst, M. and Harrison, J. (2007) Communication and new media: from broadcast to narrowcast, New York: Oxford University Press.

IFPI Digital Music Report 2007 http://www.ifpi.org/content/section_resources/publications.html (accessed 2 May 2007)

Kazaa website, http://www.kazaa.com/us/help/faq/howis_kazaa_free.htm (accessed 2 May 2007)

Kowalski, K. (2004) ‘Pirates on the Web? The downloading debate’, Odyssey vol.13, iss. 6, pp.31-33

McGuire, David. (2004) ‘Study: File sharing no threat to music sales’, http://www.washingtonpost.com/ac2/wp-dyn/A34300-2004Mar29?language=printer

McLeod, K. (2005) ‘MP3s are killing home taping: The rise of internet distribution and its challenge to the major label music monopoly’, Popular Music and Culture vol.28, iss.4, pp.521-531

Tyson, Jeff. (1998-2000) ‘How the old Napster worked’ http://computer.howstuffworks.com/napster.htm (accessed 30 April 2007)

Relevant sites

P2P United http://wiki.morpheus.com/~p2punited/
Electronic Frontier Foundation http://www.eff.org/share/
MIPI http://www.mipi.com.au/
IFPI Resources http://www.ifpi.org/content/section_resources/publications.html
RIAA www.riaa.com/issues/piracy/default