The music and movie industries are aggressivly pursuing and suing Internet file sharers—but critics say they're only alienating the very customers they're so desperate to retain
By Steve Fennessy

This is fucking bullshit. i will never buy a CD again. I am going to download as much as I fucking can now.

—anonymous message posted on chewplastic.com last month, after the Recording Industry Association of America announced it would begin suing individuals who illegally share copyrighted music

Last September, 17-year-old Ben Albert was summoned to the dean’s office at the University of Georgia, where he was a freshman biology major. Just a few days earlier, he had downloaded a movie, Austin Powers in Goldmember, off Kazaa, currently the world’s most popular file-sharing software.

Available free to anyone with a PC and an Internet connection, Kazaa allows users to swap movies, music and more with reckless abandon. At any given time, up to 5 million people might be trading files through Kazaa.

In downloading Goldmember, Albert knew what he was doing was technically illegal. But like the 60 million or so other Americans who share movies and music online, he felt comfortable playing the percentages. Somehow, though, the Motion Picture Association of America traced the download to the UGA campus. It dashed off a sternly worded letter, which ended up in the office of Kim Ellis, UGA’s associate dean of student affairs.

Ellis had seen letters like these before. Every few months, the school gets another spurt, if not from Hollywood, then from the Recording Industry Association of America, demanding that the administration crack down on students who traffic in copyrighted material. Ellis laid out Albert’s options: He could ’fess up, or he could face a campus judicial review. “I figured I’d just admit my guilt,” says Albert, who is now 18.

“I did it.”

For his sins, Albert found himself on a six-month behavioral probation. He also had to write a paper on copyright law. His friends, meanwhile, were shocked—not that he’d downloaded a movie, of course, but that he’d actually been caught. After all, downloading has become as common to 21st-century college students as getting baked was to their parents. Which is to say, it’s still technically illegal, no matter how many people are doing it.

“When it comes to computers and technology, it’s hard for people to understand the things they can do with one or two keystrokes, until you bring it into a real-world situation versus a virtual-world situation,” Ellis says. “Do you walk into a Blockbuster and walk out with a movie without paying? That’s stealing that movie.”

Ever since Napster first brought file sharing to the masses in 2000, the recording industry has been trying to make the same argument to people like Albert, appealing to their sense of fair play, of capitalistic ethics, of quid pro quo. To assure us that it’s not just their own asses they’re worried about, record execs trot out the artists themselves, who conjure up a world where musicians, made destitute by their own cheating fans, go back to pumping gas and waitressing at biker bars. No surprise that this PR campaign has been less than effective.

“Music stars who make $50 million are complaining they don’t make enough money,” Albert says. “The regular person is like, ‘Are you kidding me?’ It makes you just want to download and make them mad.”

Well, Ben, it’s worked. In July, the RIAA ramped up its assault on illegal file-sharing, bringing the battle right to the consumers. Emboldened by a recent court decision that went its way, the RIAA is forcing Internet service providers across America to hand over the names of hundreds of clients who download music online. So far, upwards of a thousand subpoenas have gone out. They will serve as the basis for lawsuits, which, by law, can demand up to $150,000 per pirated song. The entertainment industry even has its own stooge on Capitol Hill: Rep. Howard Berman (D-Calif.), who, in the past year, has introduced legislation that would involve the FBI in investigating downloading, that would permit copyright holders to sabotage file-sharing networks, and that would even send downloaders to jail. (On what is surely an unrelated note, Berman’s 2002 reelection campaign was nudged along by more than $220,000 from the entertainment industry.)

Yes, it takes a certain arrogance—some may even say rank stupidity—to sue the very people who otherwise might be your customers. Another industry might have seen a revolutionary technology like file sharing as a means to cultivate new customers, to broaden their client base, to find new ways to deliver their product to more people. Instead, the RIAA has resisted the technology, pouting about thieving fans and proceeding full-steam ahead with a tactic that even some record labels say is ill-advised.

“I think it’s ridiculous,” says Andrea White, label manager for Daemon Records, an independent label founded by Indigo Girl Amy Ray.

Already, before the first lawsuits have even gone out, the downloading community is responding. From applications that cover one’s tracks in cyberspace, to digital hubs based in Scandinavia, consequence-free downloading is alive and well.

If renegade programmers have their way, the recording industry’s efforts to save itself and its outdated mode of business will only hasten its demise.

You could say this is all Bill Clinton’s fault. In 1998, he signed into law the Digital Millennium Copyright Act, which sought to provide new ways for copyright holders to protect their work in the computer age. Today, most agree this law has stood the test of time about as well as Michael Jackson’s complexion. Vague in spots, too specific in others, it is woefully ill-equipped to deal with a technology that changes so swiftly. The act, however, has become the RIAA’s most powerful weapon in its war against individual downloaders, which began a year ago this month when, on a Tuesday afternoon, investigators for the RIAA logged onto Kazaa.

Kazaa is so easy to use, it’s almost shocking: Type in the song you want, hit search, and watch as your options scroll before you. Click on a selection, hit download, and within seconds, depending on the speed of your connection, a digital copy of the song is in your computer, where you can play it at your leisure, upload it to an mp3 player, or burn it onto a CD. Those same songs stay in a shared folder, where they become available, in turn, to other Kazaa users. Downloaders automatically become uploaders, and in this way, the love is spread.

As investigators searched through the offerings on Kazaa that day, they came across a user who’d named himself “simonglove.”

While simonglove’s collection of songs proved there’s no accounting for taste—the White Stripes’ “Hotel Yorba” was immediately preceded by Hootie and the Blowfish’s “I Go Blind,” for example—its volume was impressive. In all, simonglove listed 707 songs available for download to other Kazaa users. Investigators for the RIAA tracked simonglove’s Internet Protocol address—basically, a digital footprint you leave every time you’re online—to Atlanta-based EarthLink.

Citing the Digital Millennium Copyright Act, the RIAA requested and received a subpoena from a federal court clerk in Washington, D.C. That subpoena, and similar ones sent to Verizon, another Internet-service provider, led to a lawsuit that the ISPs have now lost. In early June, Verizon and EarthLink grudgingly turned over the names. Verizon is appealing the case, but until the next court date, in September, the industry is free to go subpoena crazy.

“When the DMCA was passed, there was a need to deal with copyright protection,” says Les Seagraves, EarthLink’s chief privacy officer. “Because anybody could get a Web page and set things up. This part was passed to give legitimate copyright holders a fairly simple method to deal with the fact that their works may be published somewhere else and their copyrights violated.”

But Seagraves now worries that the RIAA’s court victory will permit anyone with an ax to grind to get a subpoena and force an ISP to give out information about a customer. After all, it’s not a judge that issues the subpoena; it’s merely a court clerk. As Seagraves says, there’s “no due process, no judicial oversight.” Last week, the Associated Press reported that the RIAA had so far requested 871 subpoenas from a district court in Washington, D.C. Verizon alone has received more than 150.

ISPs feel they’ve been dragged into the middle of a fight between the recording industry and illegal downloaders. To them, it’s like penalizing the phone company because someone is making crank calls.

Says Jennifer Hightower, assistant general counsel for Cox Communications: “It’s not our fight, but they’re putting the burden on our back.”

But if the RIAA is exploiting weaknesses in the law, so too can ISPs. Nothing in the Digital Millennium Copyright Act requires an ISP or a university to keep records on what IP numbers are assigned to what users. Feasibly, then, an ISP can’t turn over what it doesn’t have. The recording industry would have to take its fight elsewhere.

The music business’ antago-nism toward technology is nothing new. In the early 20th century, a music publisher sued the maker of a player piano, claiming the rolls that were fed into the piano to play one of the publisher’s songs constituted copyright infringement. The case went to the U.S. Supreme Court, where the publisher lost. Over the next century, the music industry has fought virtually every other technological advance—advances that, as it turned out, would end up helping their business. Alan Greenspan, for example, is haunted by comments he made in 1983, when he told a Senate subcommittee that “unless something meaningful is done” about consumers taping copyrighted material onto cassettes, “the industry itself is at risk.”

Still, the industry’s apoplexy over downloading music is not without some justification. There are, literally, billions of songs copied over file-sharing networks every month. Unlike taping, which results in a quality loss from the original, the millionth copy of an mp3 download is as good as the first (although audiophiles will say an mp3—which is compressed—is not as pristine sounding as a legitimate store-bought CD). And on a file-sharing network like Kazaa, popular songs spread faster than a cold in kindergarten.

BigChampagne is an Atlanta-based company that monitors what songs are most often swapped online. It counts as its clients some of the world’s biggest record labels, who, even though they disparage the means, are eager to see what songs are most often traded. What’s surprising—or not surprising, depending on your perspective—is that BigChampagne’s “TopSwaps” list looks (at first glance anyway) similar to Billboard’s list of songs played and sold in conventional formats. For instance, during the week of July 14, the most downloaded song on file-sharing networks was Chingy’s “Right Thurr.” Billboard’s Top 100, meanwhile, had “Right Thurr” at No. 4.

With these comparisons in mind, it’s probably no surprise that last year the number of CDs sold in the United States fell 9 percent from 2001, a year that was itself down 6 percent from 2000.

“The cycle is bigger than anything in the past, but at this point it’s not enormously bigger,” says Stan Liebowitz, an economist at the University of Texas at Dallas, who authored what is perhaps the only academic study looking at the effect of mp3s on record sales. “If you have one more year like it, you won’t have anything like it in the modern era.”

The record industry isn’t wasting time. Before the Verizon case was even decided, the industry had already taken the battle to what is widely perceived as the biggest culprits—college students. In April, the RIAA sued four students at four different universities, accusing each of them of running local file-sharing networks on their respective campuses. One of those was Jesse Jordan, a 19-year-old student at Rensselaer Polytechnic Institute in Troy. Last October, Jordan was, as he says from his parents’ home on Long Island, looking for “something to waste some of my spare time on.” Within RPI’s computer network there were several search engines already, where students could troll for songs in their neighbors’ hard drives. But, as Jordan says, “there was room for improvement.” Often, a search would freeze the browser if you clicked on the folder of a user whose computer was turned off.

Jordan’s better mousetrap was called ChewPlastic. News of it spread through word of mouth, and from signs he posted around campus. He figures half the student body used ChewPlastic at one time or another to trade files. But in April, Jordan learned he was being sued. In its lawsuit, the RIAA said he had “hijacked an academic computer network and installed on it a marketplace for copyright piracy.”

“I didn’t want to settle,” Jordan says, but fighting a multibillion-dollar lawsuit against the record industry, win or lose, would have cost his family too much. The two sides settled on Jordan’s life savings: $12,000. At the settlement, Jordan recalls a snide warning from an RIAA attorney: “You don’t want to have another visit with a dentist like me.”

Illegal downloading, Jordan says now, “may very well be hurting their business. But they’re not taking the right approach. You can’t sue potential customers and then expect they’ll buy your stuff.”

Jordan, as it turned out, had the last laugh. Right after the settlement, he posted a link on ChewPlastic.com that allowed sympathizers to help replenish his savings. Within six weeks, he’d recouped everything, plus $5.67.

The RIAA’s vendetta against downloaders might not be making them any new friends. But then again, they didn’t have many to begin with. Music fans loathe the record business. To them, the industry has been taken over by MBAs who screw artists and customers alike. Why else would the cost of a new CD have climbed to as much as $20, when other technologies—CD players, DVD players, VCRs—have plummeted in price?

Actually, as Liebowitz found, the price of CDs has actually remained stable over the years, adjusting for inflation. In fact, thanks to discount stores such as Wal-Mart and Target, the real cost of CDs, in some cases, has decreased over time.

What’s more, while the cost of manufacturing a Kid Rock CD might only be pennies, the price tag pays for much more, which is why it’s vital that the biggest-selling artists not see their product given out for free via Kazaa.

“Younger fans, at whom pop music is aimed, tend to be comfortable with computers, which is why downloading hurts the best-selling hits more than any other kinds of music,” Hilary Rosen, the former head of the RIAA, told The New Yorker recently. “As a result, records that might have sold 8 million copies now sell 5 [million]. Unfortunately, these blockbuster sales pay for the development of new artists—Kid Rock pays for all the others.”

How to reconvert those Kid Rock fans back into paying customers is the question that will determine the fate of the recording industry. Certainly, it’s not like the labels haven’t come out with their own sites where they sell music online. Take pressplay.com, an online music service run by Sony and Universal, two of the Big Five music labels. The site seems simple: At a cost of $9.95 a month, for example, you can stream or download as many songs as you want. But cancel your membership, and you lose your downloads. Of course, you could opt for a “portable download” package, a clever euphemism for what the whole point of downloading music is: burning to a CD. Pressplay advertises “portable downloads,” but only in packs of five, 10 or 20. So actually buying music, as opposed to renting it, is a whole other expense.

Ironically, surveys have shown that most downloaders actually would be willing to pay for their downloads if there were an option as easy and as comprehensive as, say, Kazaa. Apple realized this last spring, when it introduced iTunes to Mac owners. Find a song you like, and download it for 99 cents. Or, buy a whole album for $10. No strings. No subscription hassle. The song is yours to keep or burn or do with what you want. Even though Mac’s percentage of the personal computer marketplace is in the single digits, iTunes so far has sold more than 5 million songs.

On July 22, the founder of Buy.com launched buymusic.com, intended as an iTunes for PCs. It claims to offer 300,000 songs, and individual downloads are available for between 79 cents and $1.19. However, each song has its own rules regarding how many times you can burn it to CD, or transfer it to portable mp3 players. It is, quite frankly, annoying.

Left out in the cold are traditional music retailers, who, for the most part, can’t offer singles to customers. “If a customer comes in, they have to buy the whole thing,” says Eric Levin, owner of Criminal Records in Atlanta. Levin has overheard the following remark more than once in his store: “Don’t buy it here; I’ll just download it for you.” Three years ago, that made him cringe. But he’s more philosophical about it now, figuring that if the big labels suffer, independents will step in. Plus, Criminal Records is more than records—it’s DVDs, comics, magazines and toys.

“What the big labels have been doing for the last five years is a mistake,” he says. “I don’t see peer-to-peer file sharing as the worst thing that can happen. I see it as great radio. When it works correctly, it’s a great sales tool.”

BigChampagne’s CEO, Eric Garland, would tend to agree. After three years of tracking downloads, he says appearances can be deceiving. For instance, one of the songs getting the most airplay currently is Beyonce Knowles’ “Crazy in Love.” And yet, Garland says, while it’s a relatively popular download, “you won’t see it on our Top 10 chart anytime soon.” Garland’s possible reasons for such discrepancies illustrate the conundrum facing industry watchers.

First, Billboard’s Hot 100 ranks singles based on airplay and album sales. And, as Garland notes, how often a song is played on the radio doesn’t necessarily reflect its popularity among listeners, as anyone who can’t escape Uncle Kracker’s remake of “Drift Away” will tell you.

BigChampagne’s rankings, however, track raw consumer demand: what listeners choose, as Garland says, when faced with an all-you-can-eat buffet. What’s important to remember is that downloading is primarily a song-driven phenomenon. Most people, he argues, don’t download entire albums from an artist, but rather the song they’ve heard that they want to own. This subverts the traditional model, in which a listener hears a song on the radio, or sees a video, or reads a positive review and goes out and buys a CD with a dozen songs.

“With most paradigm shifts, it’s good news and bad news,” Garland says. “On the one hand, the historical model really sort of forces people to try all your material. You bought the CD and said, ‘Hey, there’s a lot of great stuff on here.’ And you grow familiar with the collection of work. The artists are saying, ‘Wow, what happens in a world where people aren’t forced to listen to the rest of my stuff? That’s a really scary prospect.’ ”

But there’s another way of looking at downloading, Garland says. “Now there’s a venue in place for people to try and sample more of your material with little or no out-of-pocket cost. I do believe that people are discovering artists online.” Artists with no one break-out hit then, but with a consistent quality of songs, could see album sales helped by downloading.

Garland believes the death of the album format has been exaggerated. “There are some types of artist—I’m thinking of those that have a sound and a culture associated with what they do—that don’t need to worry about the death of the album because there’s always a segment of the marketplace that’s dying to hear something they’ve recorded.”

The music business, Garland says, fears the loss of control that downloading brings. But whatever the outcome of its litigious kick, it cannot fight the future. “We’re entering an era where the consumer is going to enjoy a lot more control than what he has enjoyed.”

Of course, the consumer already enjoys plenty of control, thanks to Kazaa. And as the RIAA cracks down on users, the downloading community is simply pulling up stakes and finding somewhere else to go.

Nick works in information technology at a company he won’t disclose, in a sterile office park north of Atlanta. Nick is in his early 20s, but in the accelerated evolution of file sharing, he is one of the pioneers. He’s been downloading music off the Internet since the mid-1990s, back when connection rates were measured in bauds and Napster was just a glint in founder Shawn Fanning’s eye.

As a kid, Nick’s first computer was a Commodore Vic 20. From there, he graduated to a Tandy 2000. Today his setup at home includes six hard drives, thousands of dollars worth of equipment and, of course, a DSL connection. At work, he’s even more plugged in, thanks to a wireless modem that lets him download from his laptop anywhere in the building.

Which is what he’s doing now, as he unsnaps his Dell laptop at a cafe booth a few floors down from his office. Nick figures his various hard drives contain about 500 gigabytes of downloaded material. Most of that space is taken up with movies, but he also has video games, pirated software and, of course, music. About 1,200 CDs’ worth. “I haven’t bought a CD in over two years,” he says.

As he scrolls through his collection, it’s evident Nick has more stuff here than he could ever really listen to or watch once, much less savor and enjoy. For Nick, and for those like him, it’s not about the music. At least not entirely. “It’s like a collector’s impulse,” says Fred von Lohmann, attorney for the Electronic Frontier Foundation, which is kind of an ACLU for the digital age. “They just want 50,000 files.”

Nick wouldn’t disagree. But it’s more than that to him. To him, acquiring for free that which others pay for is a rush.

Once, he downloaded a pirated copy of Microsoft’s Windows 2000 Datacenter, an operating system designed to run a business’ computer network. It can retail for $30,000. Technically yes, he stole it. But listen to his argument: “If you were never going to buy it, are you really stealing it?”

A morally bankrupt position, perhaps, but an oddly compelling one. In truth, illegal downloading isn’t really stealing in the traditional sense, any more than sneaking into a concert is stealing. Sure, if everyone did it, there’d be chaos and anarchy, and our artistic landscape would change irrevocably.

OK, maybe it is stealing. But Nick isn’t apologizing.

“By downloading, I live a better lifestyle. I can buy a nicer car, pay the rent, take my girlfriend out.”

As Nick talks, he conducts a virtual tour of the treasures awaiting a patient and persistent downloader. First off is Kazaa. Its massive popularity means it arguably has more songs than any other file-sharing network. Yet with the RIAA cracking down, what’s a Kazaa’er to do?

Never fear; Kazaa Lite is here. Despite its name, Kazaa Lite is not a scaled-down version of the original. Rather, it’s an improvement. On Kazaa Lite, you can tinker with a setting to ensure that other users can’t tell what music—other than the song they’re downloading—is in your collection. In this way, the RIAA can’t tell how many files you have available to share.

What’s more, Kazaa Lite purports to block the IP addresses of RIAA computers, hindering the searches of record-industry investigators.

But Nick seems almost dismissive of Kazaa Lite. “Have you ever heard of Direct Connect Plus Plus?” he asks.

Direct Connect connects not with other users directly, like Kazaa, but through a hub. That hub is overseas, beyond the reach of the RIAA. As he connects, a list of hubs with names like “Buick’s Moviearena” scroll down the screen. Each hub has hundreds of users. Unlike Kazaa, these hubs have requirements of their members. If you want to download, you must have a minimum amount of files to share. For instance, this hub wants 70 gigabytes, which equates to dozens of movies and thousands of songs. Nick, of course, has that and more. He opens up a user’s list. Want to download Linkin Park’s new album? How about The Hulk? What about The League of Extraordinary Gentleman? Direct Connect is a smorgasbord of entertainment.

One hub Nick opens boasts 5.42 terabytes available for trade—that’s 5,550 gigabytes. We’re talking whole libraries here.

Nick’s biggest surprise is one of the most implausible.

“Actually,” he says, “one of the best places to download stuff is, believe it or not, on AOL.” Yes, America Online—that much-maligned home to bored teenagers and hard-up adults. On AOL, there are chatrooms, public and private. Enter the right private chatroom and you won’t see any of the banal conversation that chatrooms are known for. Instead, you’ll see a steady stream of messages that are more symbols than letters. These are downloaders, exchanging lists of material for trade.

It seems, though, that this kind of downloading would be the most easily halted. All the RIAA has to do is find one of the rooms, write down the member name and report it to AOL, which, after all, is the parent company of Warner Bros., one of the Big Five labels.

Nick explains why this would be fruitless. Many of these screen names, he says, aren’t even legit. They’re pirated names, stolen by hackers from unsuspecting AOL account holders. They’re untraceable. In Nick’s eyes, this practice crosses a line. Downloading is one thing. Who’s the victim? Corporate America? But hijacking individual screen names and passwords—that’s going too far, it seems. Still, there’s a gleam in his eye.

“It’s all about keeping it free,” he says.

To be sure, downloaders such as Nick don’t have much to worry about from the RIAA. “The sophisticated people will always be able to stay one step ahead,” says Jim Butler, a technology attorney and a board member of the U.S. Internet Industry Association. “But that’s not who [the RIAA] care about. The 20-year-old college student who has 5,000 songs—that’s their target.”

As the first lawsuits draw near, the drumbeat has grown louder for a new business model for the entertainment industry. Some have suggested a tax on blank CDs, with the pot of money being divvied up based on what songs are downloaded and how often.

But who determines how big that pot of money should be? And what’s to keep a savvy musician from harnessing a bank of computers and downloading his own song a million times, so that he’ll get a bigger cut?

Others hope for a technological solution. “Digital rights management” is a phrase heard often in the industry. Basically, it refers to any technique that encrypts a CD, or keeps it from being ripped and shared. But Nick only laughs at that. “Anything they build can be unbuilt,” he says.

Meanwhile, the Electronic Frontier Foundation and other groups are fighting the RIAA’s efforts to demonize file sharing. Its “Let the Music Play” campaign, as von Lohmann explains, is intended to “get people to start talking about alternatives.

“Do you really think suing thousands of people and jailing hundreds more is really the right course of action here?” he asks. “We have to create a mechanism for paying artists, because file sharing is here to stay.”

Steve Fennessy is news editor for Atlanta’s Creative Loafing,where this story first appeared.