December 4, 2003 4:00 AM PST

RIAA lawsuits yield mixed results

The recording industry this week claimed progress in a controversial legal campaign targeting individuals who use peer-to-peer networks, but its optimism appeared to clash with at least some of the evidence, which remains murky.

By some measures, usage of peer-to-peer software such as Kazaa has been cut in half since the Recording Industry Association of America (RIAA) announced in late June that it would begin suing alleged file traders. The campaign to date has yielded 382 lawsuits and 220 settlements averaging close to $3,000 apiece. But by other measures, file swapping is hitting an all-time high.

Given contradictory and inconclusive data, reading the RIAA's progress is little more than a Rorschach test, analysts said.

"(The RIAA) gets to define success," said Eric Garland, chief executive officer of Big Champagne, a research company that tracks aggregate peer-to-peer network usage trends. "It's their campaign. They decide what their goals are, and they get to grade their own paper."

RIAA officials downplayed the significance of file-swapping data in assessing the 5-month-old campaign, relying instead on a poll showing an increase in awareness of the risks involved in the practice. Nevertheless, millions of people still appear to be trading copyrighted files in spite of those risks, suggesting the message is filtering through only slowly, if at all, in many file-swapping circles, particularly outside the United States.

"The good news is that the message is getting out," RIAA President Cary Sherman said. "I am really struck by how much awareness has increased. It has far exceeded our expectations."

From its first round of 261 lawsuits in September to Wednesday's announcement of a third round of 41 new suits, the media attention has helped drive home the RIAA's message that swapping copyrighted material is in fact illegal. As newly aware parents exert more scrutiny of their children's online actions, and as legal services such as Apple Computer's iTunes and Rhapsody gain more support, that message may have a long-term impact on Net users' behavior.

A deterrent?
At the core of the RIAA's strategy has been the attempt to persuade as many people as possible to stop trading copyrighted files online. This appears to be working in at least some groups, but the evidence is mixed at best.

The best news from the RIAA's perspective comes from Nielsen NetRatings, which has shown a steady decline in Kazaa users from a peak of 7 million per week in June, when the RIAA first announced its intention to file lawsuits, to just 3.2 million per week in November.

Some have criticized the Nielsen data, noting that it's based only on home users in the United States, and is drawn from a panel of users who know they're being watched. That means that those particular users would be most likely to give up the use of Kazaa if they learned that what they were doing was potentially illegal, those critics say.

The NPD Group, another independent research firm, measures how many households acquire any digital music on their PCs during a given month. That figure dropped sharply from about 18 million in May to about 13 million in August and has held fairly steady since, said Russ Crupnick, NPD Group vice president. About 60 percent of that figure comes from file swapping, while the majority of the rest represents people creating their own MP3s from CDs, he said.

Only 1 percent to 2 percent of digital music on PCs was coming from authorized services like iTunes by the end of October, he added, but that number is expected to grow over time.

"Right now all the numbers are overwhelmingly reflecting what's going on in the peer-to-peer space," Crupnick said.

But there's also evidence that file swapping is growing overall, according to Big Champagne. The number of people on Kazaa's FastTrack network fell somewhat over the summer, but grew to an all-time high of 5.6 million simultaneous users in October, Garland said.

The RIAA's Sherman says there's no real way to know what's happening on the networks, and points to the growth in use of "legitimate" services like iTunes as a positive sign.

"We've said that we would not be measuring this by numbers of files traded or number of users online," Sherman said. "The ultimate success here is whether the legitimate online services are gaining traction. So far that has been a glowing success."

Legal wrangling
While none of the RIAA's suits has yet come to trial, the initial stages of the campaign has prompted a series of lawsuits that could have effects well beyond the issue of music downloading.

To learn the identities of the nearly 400 people sued so far, the RIAA took advantage of a unique provision of digital copyright law that allows a copyright holder to use court-backed subpoenas to identify anonymous Internet service provider (ISP) subscribers.

These subpoenas are virtually unique in American law, since they do not have to be approved by a judge before being issued, and are used before any actual court case has been filed.

Verizon Communications was the first ISP to challenge this strategy, but a Washington, D.C., court decided that the RIAA's plans were legal under current law. Now SBC Communications and the American Civil Liberties Union (ACLU) are separately challenging the RIAA subpoenas in Washington, D.C., and North Carolina courts.

ACLU attorney Aiden Fine said his group took on its most recent case, in which it is representing a University of North Carolina student, for reasons well beyond music downloading.

"This is not about copyright infringement," Fine said. "This is about ensuring that the constitutional right to due process is met, and that the First Amendment rights of individuals using Internet are protected. Those are core issues for our organization."

Ordinary consumer backlash has manifested in several ways. Various online calls for boycotts of RIAA-member labels have had little discernable effect on sales--indeed, for the past two months, year-to-year sales figures for CDs have been rising for the first time in several years, driven largely by releases from big-name artists such as Britney Spears and the Beatles.

A guerrilla stickering campaign from activist group Downhill Battle, however, has seen labels reading "Warning: Buying this CD supports lawsuits against families and children" show up in retail record stores.

Other copyright holder groups are sitting back and watching, studying both the backlash and the potential effects on the file-swapping networks.

Some media reports have indicated that the Motion Picture Association of America (MPAA), which has watched online movie trading climb sharply in 2003, has already decided to pursue a similar course of lawsuits. MPAA spokesman Rich Taylor said that's premature, however.

"We have no current plans to take actions against individuals," Taylor said. "But we're not ruling out any actions we can take to combat piracy."

The RIAA's Sherman said that his organization would continue pursuing individuals over the long term. The dollar amounts of settlements would likely go up as the campaign progressed, and the number of files needed to trigger a lawsuit would likely go down, he said.

"We think we're on the right path," Sherman said. "That doesn't mean that we've achieved what needs to get done."

 

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