This paper argues that while illegal file sharing constitutes genuine theft of intellectual property, regulatory and legislative responses in the United States have gone too far, infringing on the individual liberties of Internet users and technology developers. Tracing the legal history from the landmark Napster ruling through the Grokster case, the paper draws parallels with earlier copyright battles over VHS and Betamax technology. It invokes the Fair Use Doctrine and economic arguments about the "exposure effect" to challenge the music industry's protectionist stance, and critiques provisions in the Higher Education Act of 2008 that pressured universities to monitor student Internet use. Ultimately, the paper contends that the music industry must adapt its business model rather than relying on aggressive litigation.
Illegal file sharing — the legal version of killing a fly with a sledgehammer. It seems so easy, like a victimless crime, which explains its commonality. However, if that is the case, then why have so many musical artists known for their support of free speech and free use of the World Wide Web taken such a strong stance against it? It is true that illegal file sharing is theft. Although the object cannot be seen or touched like a physical item in the real world, the theft of intellectual property — such as a work of music downloaded without paying the artist the required royalty — is still theft. Artists fear for the loss of their livelihoods, given that benefiting from copyright protection is often the primary way they earn money from their songs, tunes, and lyrics.
But how does the government go about enforcing laws against file sharing online in a way that protects consumer freedom to download music, the freedom of computer programmers to create file-sharing technology, and the freedom of musical artists? Because it is almost impossible to prosecute individual users, regulatory agencies have tried to exercise oversight against the providers of file-sharing services. While it may be appropriate to do so in some cases — as with Napster — in more recent cases the courts and Congress have gone too far in trying to regulate file sharing and have impinged upon the individual liberties of Internet users in doing so.
The most famous case of copyright infringement on the Internet was that of Napster, and it has since provided the model for most cases that followed. The type of file sharing conducted on Napster was eventually declared illegal. Napster was found guilty of contributory infringement of copyright laws in A&M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896 (N.D. Cal. 2000). Napster was described as a wheel at the hub — the center of illegal network activity. "All file transfers went to the center and then were uploaded from there," in the way the file-sharing system worked (Hersche 2005). Napster's managers could delete uploads and were fully in charge of all traffic, and therefore committed contributory infringement of copyright laws. As defined in the case, contributory infringement is "inducing, causing, or materially contributing to the infringing conduct of a third party, 'with knowledge of the infringing activity'" (Hersche 2005).
However, the Napster decision set a dangerous precedent, creating an overzealous environment for regulating music downloading and the creation of file-sharing technology. In a later case, the file-sharing service Grokster argued that its FastTrack network had legitimate purposes. Although its peer-to-peer technology allowed users to index media files on their computers and make those files available for others to download, Grokster argued that "illegal downloading and uploading of copyrighted materials is beyond the control of the software designers" (Hersche 2005). The Supreme Court disagreed, ruling that because the apparent purpose of the software was to encourage illegal downloading, it had to be disbanded entirely.
Ironically, the same argument could be made of a Xerox machine, which has both legitimate and illegitimate uses in terms of copying books and other printed material. The illegal use lies in the way the material is disseminated, not in the technology itself. Furthermore, similar arguments about technology infringing upon copyrights were once made against Betamax and VHS before those technologies became ubiquitous in the 1980s.
Movie studios were afraid they would go bankrupt if individuals could tape programs on cassettes and watch them whenever they wished in the comfort of their own homes. "Universal Studios Inc. and Walt Disney Productions Inc. accused the Sony Corporation and several other defendants of infringing their copyrights," but "the Supreme Court reversed the appeals court's ruling [and] held that since the harm to copyright owners from home taping was minimal and speculative, home taping should be considered fair use" (Liebowitz 1985, p. 2). The Justices used the Fair Use Doctrine to support their decision, holding that although VHS could be used for illegitimate purposes, "the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords — for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research" — represented a more important right to protect (Liebowitz 1985, p. 4). Freedom of access to information, and a free market environment of ideas, were deemed more important values. Granted, file sharing is not always used for such legitimate purposes, but then again, neither were taped VHS movies and programs.
While intellectual property law "provides the copyright holder an exclusive right to copy the intellectual product" — a protection necessary because "the lack of competition in the reproduction of the intellectual product allows greater remuneration to the copyright holder than would otherwise be the case" — the right to profit from one's product is not absolute, and the consumer also holds a right to fair use and access (Liebowitz 1985). Furthermore, even if Grokster and Napster were largely illegitimate operations, the industry's response of zealously prosecuting them may have been an excellent example of using a sledgehammer to kill a fly. In many cases, "illicit copying might actually benefit copyright owners" through the "exposure effect," whereby consumers become familiar with a product they would eventually purchase (Liebowitz 2007). The rise of VHS, for example, precipitated new interest in the entertainment industry rather than destroying it.
Laws against file sharing have also proven almost impossible to fully enforce and have, if anything, spurred hackers on to be more creative. No matter how many court battles are fought, the music industry — if it does not change — will continue to feel the economically detrimental effects of its outdated methods of music marketing. The real heart of the illegal downloading issue is that the music industry, faced with plummeting CD sales and the persistent difficulty of regulating illegal file sharing despite favorable rulings in the Napster and Grokster cases, has struggled to rethink its model for generating profits. Programs such as American Idol, live music concerts, fan magazines, and other revenue-generating methods appear to offer a better path to profitability for the music industry going forward.
"Campus monitoring provisions and lobbying pressure"
This type of hostile approach is absurd, especially given that the music industry is effectively pressuring Congress to take action against its own fan base — and what is an entertainment industry without fans? Rather than focusing on taking legal actions against users and providers of music and other peer-to-peer file-sharing methods, the music industry and other industries affected by file sharing must find new ways to become profitable and solvent in the new economy. The real issue underlying the debate over illegal file sharing is that the music industry cannot afford to live in the past. It must stop attempting to shut down file-sharing sites and instead focus on reinventing itself in a new, virtual world.
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