An Assessment of File Sharing in the Music Business

An Assessment of file sharing in the music business

An Assessment of file sharing in the music business

and online music piracy, and its ethical implications regarding consumers, musicians, and record companies

Background

"In traditional ethical studies, the classic problem is the starving man - can a starving man ethically steal a loaf of bread if he has no money. The modern version is evidently, can the person who wants to listen to music steal it if he thinks the price is too high?"

The topical escalation of media coverage besieging the demise of Napster has instigated widespread debate over the implications file sharing and the Internet will have for the record industry. The Napster software allowed its millions of users to share and download music mp3 files, which are of near CD quality, from each other's hard drives. This infringed copyright laws and provided a very real threat to both musicians and record companies alike. In response Napster was sued by the American heavy metal band Metallica, and then taken to court by The Recording Industry Association of America; where they were subsequently ordered to cease operating. Despite this verdict, many similar companies such as Grokster and Kazaa continue to offer file-sharing facilities and provide free access to copyrighted music.

There are numerous arguments originating from all sides of the debate. Many of these are mutually exclusive and, therefore, cannot all be substantiated. McDougall (2000) published an article online, in which he summates the main arguments listed below:

* Copying is fair use

* Copying is theft

* Music wants to be free

* Napster users buy more CDs

* Music companies make too much money

* Music companies will make more money with Internet distribution

* Musicians can't make money with Internet distribution

Musicians will make more money with Internet distribution

Within the context of a report, the following discussion will evaluate these key points from the perspective of the consumers, musicians, and record companies.

The Consumers' Perspective

There are two fundamental arguments that endeavour to justify online music piracy from the consumers' perspective. The first is that copying is fair use. Many believe that subsequent to buying a recording; consumers should be entitled to do with it as they please. This is a very difficult matter to police, as the Internet is a global entity, and all nations have their own laws and regulations. The bulk of the legal disputes, however, have taken place in the United States, where Napster and the RIAA were based. The following is an extract from the U.S. constitution regarding American copyright laws:

"The Congress shall have power... to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries."

The fair use clause, as argued by the consumer side, is in section 107 and allows use for activities such as: criticism, comment, news reporting, teaching, scholarship, or research. Copies may be made for teaching but it does not allow any copying for entertainment or recreational purposes. This law is now being enforced with regards to online piracy due partly to the efforts of the Recording Industry Association of America. Such is the antagonism felt by consumers over this pronouncement that an organization has been set up to promote a boycott of the RIAA. Their website opens with the following text:

"Boycott-RIAA was founded because we love music. More and more the RIAA and the major labels have attempted to lock up our culture and heritage through extensive lobbying, outrageous campaign donations, misleading our political leaders and lying to the public, while misrepresenting the facts."

This suggests that consumers have the right to download music for free, as the practices of the major labels and industry bodies such as the RIAA are questionable. This is irrelevant as stealing intellectual property is still stealing, despite the substantiation of a physical product. "Piracy is theft. It is the reproduction of someone's copyright without their approval and generally on a commercial scale." The International Federation of the Phonographic Industry is the industry body that publishes statistics and information regarding recorded music. In 2002 they published their music piracy report that highlighted the far-reaching effects of music piracy, which effects governments and whole economies rather than just overpaid record company executives.

"The economic losses due to piracy are enormous and are felt throughout the music value chain. The victims include the artists whose creativity gets no reward; governments who lose hundreds of millions of tax revenues; economies that are deprived of new investment; consumers who get less diversity and less choice; and record producers who are forced to reduce their artist rosters because it is impossible to compete against theft."

Having established the far-reaching consequences of music piracy; it becomes harder to justify this behaviour, regardless of the music industry procedures. This is another issue entirely and consumers do still have a choice. Because we live in a free market economy, consumers may choose to buy music from one of the thousands of independent labels. Consumers may also choose not to buy recorded music; it is not an essential commodity as in the case of the starving man and the loaf of bread. They could still hear the music on the radio or television. If a whole generation of people become used to not paying for music, the industry may never recover and aspiring musicians will have no motivation to create new music. The ethics become even more questionable when it is pointed out that a lot of people make a lot of money from online music piracy. The IFPI claim the global pirate market is worth US.3 billion (this includes pirate CDs as well as online piracy).

There is another contention in the defence of file sharing. It has been argued from various sources that overall record sales enjoyed a period of growth during the time that Napster was in operation. This gives rise