The File Sharing Solution

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File sharing is the practice of making computer files available for other users to download over the Internet and smaller computer networks. Usually file sharing follows the peer-to-peer (P2P) model, where the files are stored on and served by personal computers of the users. Most people who engage in file sharing are also downloading files that other users share. Sometimes these two activities are linked together. Although file sharing occurs with all forms of media (including movies, shows shows, and books), the vast majority involves MP3s.

This wiki page is designed to be interactive, so feel free to edit the page & insert your opinion however you want. Specific ways you can weigh in: Add to the "pros & cons" section and add/edit/answer the prompt questions at the end of the page.


History

File sharing was first made popular by Napster, the 1999 brainchild of 18-year-old Shawn Fanning. Napster was a program that allowed users to share & swap MP3's through a centralized computer server. Napster was the first major P2P file sharing tool, but it only allowed users to share mp3 files. Recording artists were split on the technology; some (Metallica) lead the attacks while others (Dave Matthews) supported the program. Napster continued growing in popularity until 2001, when the RIAA won an injunction forcing the site to close its doors.

Post-Napster, PRP programs continued to evolve. Programs like Audiogalaxy, Morpheus, BitTorrent, Limewire, and Kazaa have fed the public thirst for free music. As more and more individuals (between 25-50 million) turn to file sharing as their primary means of acquiring music, and after the Supreme Court's ruling in MGM v. Grokster was unclear about the liability of the file-sharing programs themselves, the RIAA began coming after individuals. To date, over 20,000 lawsuits have been filed against individual downloaders. However, the effectiveness of this strategy is contested. Certainly, one major drawback of filing suits against the consumers is that the demand for free music will not be eliminated.

Where Things Stand

As the industry continues to sue its main consumers, file sharing continues unabated. Regardless of one's position, two facts seem uncontested: (1) file sharing is here to stay, and (2) the current incarnation of file sharing is illegal. The best resolution to the controversy may be to broker a compromise between the labels, artists, and fans that resolves the tension inherent in these conflicting truths. Several ideas have been advanced, from the radical {like artists giving away their albums) to the conventional (the Cornell Music Project).

Voluntary Collective Licensing (the "radio solution")

Groups like the Electronic Frontier Foundation and Downhill Battle suggest approaching online file sharing as we do radio play or cable television. The approach behind Voluntary Collective Licensing is simple: Internet users would pay a modest fee (around $5/month), generating around $3 billion a year in revenue, for the right to unlimited, "all-you-can-eat" music downloads. A central collection agency would gather the money and divide it among the artists/labels according to their popularity.

Pros:

1. For the listener, this approach is vastly preferable to the $1/song approach of iTunes.

2. The fee will be modest enough that even marginal file sharers shouldn't be too upset.

3. The libertarian approach - government has no business getting involved.

4. Artists & labels ultimately receive more money than they can generate through individual lawsuits.

5. Unlike services like iTunes (which take up to 35% of each download), artists/labels get close to 100% of money paid for downloads.

6. Those who crave higher quality music will still be able to buy CDs or 'premium' mp3s from a service like iTunes. This just gives more choice to consumers.

7. One can listen to the radio and record the songs.

Cons:

1. People who download 1 song a month pay the same as those who download 10,000.

2. This approach "fixes" illegal behavior by merely legalizing it.

3. The libertarian approach - government has no business getting involved.

4. You will get a lot of traffic/revenue in the beginning as everybody downloads their favorite hits from the 80's, and then it might not be worth it to stay signed up just in case Britney makes a comeback.

5. People still would have to pay (albeit less than iTunes) which they don't want to do.

6. People will have an incentive to subscribe, download like crazy, then stop subscribing until the next time they want to download a huge number of songs. If you control this by programming some kind of timer into the files so that they don't work unless you're an active subscribers, well, that would be annoying. Others?

Further Discussion

(feel free to add questions)

1. How will advances in technology affect the marketing & distribution of music?

File sharing only became an issue after MP3s. They solved the problem of large music files, making it easy to download, store, and share songs. New technologies will work their way to the market that will disrupt MP3s in a like fashion. If streaming technologies become more portable (your iPod would stream songs from a central server rather than storing them on a hard drive) or phones delivered songs and playlists on demand, we would have a very different digital music scene. While these are only two examples, they do suggest that the future may lend itself to centralization, which may mean a return to industry regaining control over the way music is distributed.

2. Are there any unseen potential consequences (good or bad) of the "collective licensing" approach?

I don't like the idea of Big Brother controlling/knowing what I download. It's not that I'm embarrassed that I love the Backstreet Boys, but it just rubs me the wrong way. No doubt, once the government got their clutches into my IP address, the NSA would justify some secret wire-tapping program and that would be the end of privacy on the internet.

I think a hidden impact of the collective licensing compromise is the boon that it would be to the record industry's ability to know, monitor, and market its products to the tastes and interests of its customers. Certainly, the amount of information generated about the downloading habits of millions of customers could mean an amazing leap forward in pinpoint marketing and multi-product integration. As a consumer, I blanch at the idea that my downloading habits could be the fuel for a new wave of precise and intrusive marketing. Personally, it is simply not worth the tradeoff of sacrificing a new level of privacy for the economic savings that collective licensing would provide. Of course, attempting to protect my privacy by not joining a collective licensing downloading service that would track my musical procurement is not exactly the most heroic or symbolic place for me to make my Tiananmen Square-like stand against the tank.

2. Do you buy the idea that file-sharing has NO negative impact on traditional record sales? This position has been taken by Dr. Oberholzer (of Harvard Business School) and Dr. Strumpf (of the University of North Carolina) here.

I haven't read their argument, but I don't buy it for a minute. True, there are the audiophiles who will buy records no matter what. But there are millions of young people who have grown up with digital music and don't think there's any difference between the quality of mp3s and CDs. And even if there were a difference, they have grown accustomed to buying one song at a time, and won't see why they should have to buy a whole CD if they don't want it. Those of us who are older feel like we "should" buy the CD because that's the "right thing to do." But that sentiment is on its way out. And the more the record companies piss people off with lawsuits, the more it'll be an adversarial relationship, and it'll just feed back on itself.

The assertion that it has "no" negative impact is probably overstated. While it's easy enough to see how open information sharing helps spur the music sales of some bands, the same is probably not true for the most popular bands. Regional bands without a national marketing presence probably enjoy increased record sales in proportion to their increased exposure. However, the like of Madonna, Britney, and Justin don't need the exposure. Their marketing teams spend millions making sure there is full market penetration in their key demographics. Because the main benefit of file-sharing for record labels is increased marketing, and because the marketing plans for top artists have already reached basically everyone, the availability of free songs on the internet won't help these artists. Instead, they will be hurt by free riders who listen to their music without paying. Incidentally, another industry likely hurt by file sharing is radio. In the not too distant past, people used to listen to the radio because they knew songs would be playing that weren't available on CD or to hear a song to decide whether to buy it on CD. That phenomenon is practically non-existent now, and most younger people would probably say that they only listen to the radio in the car.

3. If you were the CEO of the RIAA, what approach would you take to combat the widespread piracy of your music?

I would want to use the "Prof David Rosenberg" approach: Just stick liability on those who have the power to stop it. Forget about the niceties of secondary liability law...if the ISPs, universities, hardware makers CAN stop the infringement, hit them with billions of dollars of damages. I can guarantee they would figure out a technological fix VERY soon. And it wouldn't be something dinky like CSS that is easy to circumvent. They would REALLY fix it if they knew they could get hit for billions more in damages. Of course, the Supreme Court has ruled otherwise (capable of significant non-infringing use standard in Sony v. Universal). But, that's what I'd want if I were him.

I would rely upon a technological solution as CEO of the RIAA to combatting widespread piracy. The hardcore music pirates will be able to circumvent almost any legal or technological solution, but a difficult copyright protection encryption could prevent average users from easily engaging in piracy.

4. What's your favorite band? How much would you pay for their next album/concert?

Response: While I'm not sure if they're my FAV band, Len sure seems to me the most talented group to record a sunshine song since Katrina & the Waves' "Walkin on Sunshine." I would only pay a couple of dollars for an album, but I would easily pony up forty bucks to hear them play "Steal my Sunshine" repeatedly for a few hours.

I'd pay anything to go to a Mariah Carey concert. If only I could get somebody to come with me...

5. Would you listen to more,less, or the same amount of music/bands if you could get it for free?

I think I would listen to more bands if I could get their music for free, or pay a small fee and be able to download as much as I wanted. I would rather not pay for an entire CD worth of music from a band that I didn't care for in the end. I know that you can buy individual songs from e-stores like iTunes, but I would listen to more music and tell others about the new band I heard, making it easier to get music to the masses.

While my initial reaction is that I'd listen to more music if I could get it for free (since that just seems logical), I don't think it's been my actual reaction to the current situation. I downloaded free music in college, but when they started going after people for it, I completely stopped and have only used itunes or bought cd's since. Perhaps the act of clicking a button saying "buy" is enough separation from the actual act of putting in my credit card number. Perhaps I just still spend the money on music because it's important to me to have it (even silly songs that probably aren't worth the 99 cents), and I don't see free downloading currently as a safe enough option. Either way, I don't think very much about the fact that I'm spending money when I download a song, and have downloaded probably at the same rate as I did before I stopped using free downloading.

Certainly I'd listen to more music from a more eclectic selection of artists if I could do so for free. Eliminating fees allows consumers to browse through musicians at home with much lower costs, thereby exposing all to more of the art. How tenable this would become from a business standpoint remains to be seen. Perhaps everyone could agree to advertise during their songs or write more songs plugging individual products in the same fashion as sitcoms have shifted toward incorporating ads into episodes to increase revenue.

I would fully advocate free samples of music, since that approach broadened my own horizons. I'm impressed with MySpace's band pages, which allow browsers to do exactly that. Recently, one such performer encouraged me to attend his first record release party, and I bought the album right then and there. A short-term solution to the file-sharing problem would be to market free full samples (timed files or browser-only) to encourage CD sales; in the meantime, profit-sharing solutions from authorized downloads can be hashed out among all parties. Strengthening CD sales should be some priority until then--perhaps encouraging artists to put quality effort into songs that aren't singles and producing an overall higher-quality product?

6. Is there concern that the quality of music will decline/ascend as availability to all music becomes available at little cost?

The argument that music quality will decline is the apocalyptic result record companies have referenced since Napster. The initial argument seems valid: that new, online music markets would skew incentives for recording artists and producers. Without the ability to get rich from a multi-platinum album, artists won't work as hard and producers won't look as much for talent. As a result, the product -- music -- will decline.

There are two reasons why this scenario will never actually come about. First, bands will always have an incentive to make good music: fame, impressing members of the opposite sex, and maybe a dedication to their art. The musicians will also be more than adequately compensated; after all, musicians make more money from their tours than from their albums.

Second, record companies are becoming less necessary. New modes of distribution may mean that record companies may make less money off of each album, and that might reduce their incentive to find good talent. The need for their talent-finding, however, is being drastically diminished. Podcasting, MySpace, Facebook, and YouTube have democratized the distribution system in a way that has never been seen before. And legal music distribution systems, like eMusic, allow listeners to test out new musicians at very low costs. Now, artists can access fans directly without going through the middle-man of Virgin Records.

This transformation will actually improve the quality of music drastically. What we are seeing is what has been deemed the "long tail" effect. As markets fragment into more specialized niches, and as distribution of products becomes less expensive, distributors are able to supply a wider product variety at a lower cost. Just as Hollywood is moving away from the "blockbuster" movie, music will move away from the "multi-platinum" album. Instead of trying to manufacture the next Britney Spears, record companies will profit by creating a stable of smaller, more diverse groups. Consumers with widely varying tastes will be more likely to find artists that meet their tastes; no longer will they be limited by the physical capacity of the record store or the financial capacity of labels to support musicians.

7. Would the recording industry ever agree to a solution that didn't involve some sort of direct payment for each song or album downloaded?

If there's anything I've noticed about the record industry, it is its inflexibility. The record companies are unlikely to agree to a solution without direct payment without a fight. Given the rate of change that it faces, the industry will have to adapt or collapse. By the time such collapse is imminent, then will it consider some free solution, like programming timers into popular singles or making older albums free.

8. Could file sharing actually increase album sales, given that listeners can be exposed to countless artists that they never would have heard otherwise?

It is possible that the viral nature of file-sharing could have such an effect. More people would have exposure to music without the risk involved in purchasing an album or a song one has never heard before. However, the prevalence of file-sharing and the popularity of online music suggests that consumers are unwilling to pay for the extras that traditional albums come bundled with (e.g. publicity, CD packaging, release parties, etc.) In some ways, this consumer behavior is analogous to that in the airline industry where the most salient and influential factor to consumers is price. If the record industry were willing to accept lower profit margins and correspondingly reduce expenditure on these extras that are incidental to the production of quality music, traditional formats might well remain competitive with electronic files. They do have some advantages that consumers might be willing to pay a small premium for such as the fact they come packaged in an archival format exhibit superior sound quality. To the extent that the price of an album was competitive with online prices and these other factors represent added value over online content, music sales in traditional forms might increase by eliminating the risk of making a poor choice (i.e. purchasing an album because of one song and later realizing that is the only good song on the album). In addition, there is no secondary market for online files (this does not matter if the files are free or virtually costless, but it does matter if they come at a price) - they cannot be resold like CDs can be. It should be noted, however, that it is likely the resale market for CDs has diminished due to the advent of electronic files.

Listeners would probably be exposed to more artists, but they could continue to get the music for free, so I think it's hard to tell if it'd actually INCREASE album sales. I know people who will buy the cds of people they like simply to support them, and I know people who'd never pay a cent for music when they could get it for free, justifying it by saying that they'll make their money in other ways and that the record industry has been ripping us off for yeas. It's hard to tell (in theory) how the two reactions would balance out.

Other Ideas

This is the place for any thoughts you have that don't fit elsewhere. Don't be afraid to express yourself.


I think that if they made the liability for individual downloaders REALLY serious, and educated people that they were going to enforce it, people would follow it. For example, I have a sense right now that I can download and never get prosecuted/sued. But I know I am more likely to get prosecuted if I UPLOAD. So, when I download things, I immediately take them off that hard drive so they can't be uploaded by others. It's not that I'm a jerk who is unwilling to share. It's just that I know that's the best way to avoid liability. So, if I knew the record companies were going to hit me for the full statutory damages available (it'd be MILLIONS for my music collection) I would delete everything. It's just not worth that risk. But because they're not going there, I won't. So, the point is, I think it's just a matter of education about the law. Then, of course, they'd have the problem that their customers would hate them. There's no good solution.

Maybe you could do your compulsory royalties scheme NOT as a $5/month optional service, but just as a "culture tax." We already tax for the NEA (I think). So we could just say "America values intellectual property, and technology has rendered IP a classic public goods problem, and we want to foster our artists' creation, so all Americans should pay for it." And then musicians could be paid at the end of the year, pro rata based on how much their songs were downloaded. Then it wouldn't matter WHO downloaded it (so my Big Brother fear wouldn't be implicated) but the ISPs could just count THAT it was downloaded. And artists can still make their money from concert tours (which is the bulk of their money anyway).

Digital media in any form, music or video, presents a host of problems because this type of thing has never been seen before. It is a product that can be copied and distributed with no cost to the distributor or consumer. If you had the ability to copy a Corvette, for example, simply by pressing a button, I bet you would do it. Also, if your friend wanted one, you would probably copy him one and share it with him. But what if your friend lived hundreds of miles away? We would need another button to magically place the car in his garage because it costs way to much to transport it by any non-magical means. While this analogy is absurd, this is what we have with digital media. It costs nothing more than a button push or two to copy and distribute any amount of media anywhere in the world. As long as this is the case, digital media piracy will never be enforcible without some entity monitoring our lives and communications in a way that most of us would deem unacceptable. The music industry will have to change. Physical media is soon to be a thing of the past. With corporations like Google offering us large amounts of free disk space that I can access from anywhere, why would I want to carry around CDs or DVDs? And if Joe can upload his collection to my account, why would I purchase it? I am not advocating music piracy, but these are questions that I know many of us have asked. We see how cheap it can be, but we are asked to pay what seems to be an unreasonable amount for a product that in many cases leaves much to be desired. Something will have to change, and technology will not be the answer. No matter what technological solution the RIAA or big media comes up with, some high school hacker will circumvent it. Here's a thought. Before the days of recorded media, musicians were expected to have talent and make their living from performances. Now, because music is just another mass-produced commodity, we have an entire industry that is based on the production and distribution of an inferior product. Take the business out of producing music, and put it into the creating, performing, and sharing of the music by the artists, and this will not be an issue.


One good thing about sharing music is that musicians that might not ever be heard are getting their music out there. I know that I wouldn't ever go spend $17 on a cd of a person that I had never heard of or heard only one song and hope that it was going to be a good cd. I think there is a happy medium between getting free music and having to pay a ridiculous price for something that you aren't even sure of. As long as there are ways to get free music, people are going to do it. Record sales are not the only way artists make money. They make a lot of their money from tours. Maybe they need to be creative and come up with other ways to make money.


Sometimes I feel like I'm the only person out there who feels a little bit bad about illegally sharing music. We created property rights in intangible things like music for a reason. I am guilty of it myself, but I think that it's easy to separate ourselves from what certain kinds of file-sharing actually is because (a) we don't have to actually walk out of a store with something in our hand and (b) it's been difficult to prosecute so there are few consequences to us. I don't know much about copyright law, so this is just an intuitive response, but I haven't heard any arugments which discount it as a concern.


I downloaded songs so often that I sent a history of my Internet Explorer to prove to my Youth Director that I had not visited the sites.

I used to download music all the time, but then my computer crashed with viruses. I don't touch the stuff now.

Maybe if music companies didn't rip people off with how much they charge for records, people would feel they were doing something wrong by downloading music for free. If prices were reasonable, people wouldn't feel like they had a right to "stick it" to music companies that were trying to take advantage of them. Unreasonable prices make downloading music seem like some kind of civil disobedience or act of righteous indignation instead of stealing.


Perhaps it is because I have no steady income at the present time, but whether it was five dollars or fifty cents, I would consider the payment a bit of a hassle. For some, it is one more way to incur debt on their nearly maxed out credit card. Nevertheless, I do not feel that free access is the solution either. One possibility might be comparable to the public library systems. As mentioned above, individuals pay a type of public access tax. For that matter, maybe the public could support agencies or the like, comparable to public radio or television. It would be on a voluntary basis. Yet, it would be dependent upon those contributions to function. Therefore, there would be a need for significant donors. While reality shows us that many would undermine the structure, I believe that others would end up donating money. It is roughly the same concept as a membership fee; but, it has a different name. And sometimes, that is all that matters.