Internet Piracy

Piracy is a form of theft. Specifically, it refers to the unauthorized copying or use of intellectual property. Intellectual property is knowledge or expression that is owned by someone. There are three major types of intellectual property: 1) creative works, including music, written material, movies, and software, which are protected by copyright law; 2) inventions, which are protected by patent law; and 3) brand-name products, which are protected by trademarks. Many of the issues surrounding piracy have to do with the difference between intellectual property and physical property. A CD, for example, is a piece of physical property, but the songs on the CD are intellectual property. A customer in a record store can purchase a CD, but someone else still owns--or more precisely, has the copyright to--the songs on the CD.

Piracy is primarily a problem for the entertainment and software industries, and therefore piracy most often involves violations of copyright law. Copyright is a legal right that protects creative works from being reproduced, performed, or disseminated without permission of the copyright owner. Essentially, a copyright gives its owner the exclusive right to make copies of the material in question.

Physical piracy--the copying and illegal sale of hard-copy CDs, videotapes, and DVDs--costs the music industry over $4 billion a year worldwide and the movie industry more than $3.5 billion. These numbers do not factor in the growing (and difficult to measure) problem of Internet piracy, in which music and movies are transferred to digital format and copies are made of the resulting computer file. Journalist Charles C. Mann explains why Internet piracy has the potential to be vastly more damaging to copyright industries than does physical piracy:

To make and distribute a dozen copies of a videotaped film requires at least two videocassette recorders, a dozen tapes, padded envelopes and postage, and considerable patience. And because the copies are tapes of tapes, the quality suffers. But if the film has been digitized into a computer file, it can be E-mailed to millions of people in minutes; because strings of zeroes and ones can be reproduced with absolute fidelity, the copies are perfect. And online pirates have no development costs--they don't even have to pay for paper or blank cassettes--so they don't really have a bottom line.

The problem of Internet piracy did not gain national attention until Napster gained an enormous following in 1999.

The original Napster, created by then-college student Shawn Fanning in May 1999, was an online music service that enabled users to trade digital music flies. Napster used a technology known as peer-to-peer (P2P) networking. P2P networking essentially enables users to link their com- puters to other computers all across the network. Each user linked to the Napster network was able to share his or her music files with all the other users on the network, and each user was in turn able to download a copy of any music file on almost any other computer in the network. Napster claimed to have over 20 million users in July 2000, all of them making copies of each others' music.

By that time, Napster had become the subject of a massive controversy over online file sharing. Part of Napster's appeal was intertwined with the novelty of digital music: Many technically inclined people enjoyed using computer programs to organize their music collections and also liked being able to "burn" their own CD mixes. But the truly unprecedented aspect of Napster was that it gave users convenient access to a seemingly unlimited selection of music--for free.

Many fans of Napster did not view downloading music as piracy; they argued that Napster was a tool for music sharing, not stealing. They also contended that Napster gave new exposure to independent musicians. A teenager quoted in a June 2000 Newsweek feature on Napster summed up the typical view: "People don't think it's anything bad. . . . Or think about it at all." Meanwhile, the creators of Napster claimed that they were not responsible for what users did with their software.

The music industry disagreed. "What Napster is doing threatens legitimate E-commerce models and is legally and morally wrong," said Hilary Rosen, then-president of the Recording Industry Association of America (RIAA), the trade group that represents the U.S. music industry. Several record labels filed suit against Napster in December 1999, and after months of hearings, Napster was eventually shut down in July 2001.

To the frustration of the music industry, other file-sharing services emerged to take Napster's place. Some never gained a wide following of users, while others, such as Scour, Grokster, Morpheus, and Audiogalaxy, were targeted by copyright-infringement lawsuits. In late 2003 one of the most popular file-sharing services was Kazaa.

Although Kazaa and other file-sharing services allow users to share movie files and software as well as music, the music industry has led the fight against online file sharing. The RIAA and other organizations representing the music industry blame online file sharing for the 26 percent fall in global CD sales that occurred between 1999 and 2003. Many factors, including a sluggish economy and a lack of exciting pop music releases may be responsible for the decline, but as reporters Kenneth Terrell and Seth Rosen note, "digital piracy undoubtedly plays a role."

Kazaa is owned by Sharman Networks, which is based on the South Pacific island of Vanuatu and is thus less bound by U.S. laws. Kazaa and other descendants of Napster also use much more decentralized P2P networks than did Napster and cannot be eliminated by shutting down a few servers, as was the case with Napster. Therefore the music industry has begun focusing on individual file sharers rather than the P2P networks they use. In April 2003, for example, the recording industry sued four university students in federal court, accusing them of making thousands of songs available online for illegal downloading over P2P networks. The RIAA took a much larger step in September 2003, when it filed lawsuits against hundreds of Kazaa users, threatening them with penalties of thousands of dollars per copyrighted work that was shared online. "We've been telling people for a long time that file sharing copyrighted music is illegal, that you are not anonymous when you do it, and that engaging in it can have real consequences," said RIAA president Cary Sherman. She added, "Nobody likes playing the heavy and having to resort to litigation, but when your product is being regularly stolen, there comes a time when you have to