1. Music File Sharing Caitlin Smith Stewart Rutledge Jess Culpeper

2. Music File Sharing What is it? What is it? Where did it start? Timeline. Where did it start? Timeline. Impact File Sharing as on the Music Industry and the consumer Impact File Sharing as on the Music Industry and the consumer Current ways of music file sharing. Current ways of music file sharing. Illegal and legal ways of file sharing. Illegal and legal ways of file sharing.

3. What is Music File Sharing File Sharing - the process of direct or indirect data sharing on a computer network with various levels of access privilege File Sharing - the process of direct or indirect data sharing on a computer network with various levels of access privilege Copyright - the exclusive right to make copies, license, and otherwise exploit a literary, musical, or artistic work, whether printed, audio, video, etc. Copyright - the exclusive right to make copies, license, and otherwise exploit a literary, musical, or artistic work, whether printed, audio, video, etc. Intellectual Property - A product of the intellect that has commercial value, including copyrighted property such as literary or artistic works, and ideational property, such as patents, appellations of origin, business methods, and industrial processes. Intellectual Property - A product of the intellect that has commercial value, including copyrighted property such as literary or artistic works, and ideational property, such as patents, appellations of origin, business methods, and industrial processes. P2P - Peer to peer allows internet users to transfer files directly, rather than through the use of a website or directory. File transfers are done directly from the users' computers. P2P - Peer to peer allows internet users to transfer files directly, rather than through the use of a website or directory. File transfers are done directly from the users' computers.

4. Where did it start? Where did it start? July 1999, Napster was available to the public July 1999, Napster was available to the public 2000, Metallica, Dr. Dre, and Madonna all filed lawsuits against Napster 2000, Metallica, Dr. Dre, and Madonna all filed lawsuits against Napster Claims were: Claims were: 1. That its users were directly infringing the plaintiff’s copyright. 2. That Napster was liable for contributory infringement of the plaintiff’s copyright 3. That Napster was liable for vicarious infringement of the plaintiff’s copyright 26.4 million users worldwide in February of 2001 26.4 million users worldwide in February of 2001 July 2001, Napster was found against on all three claims. Napster is shut down. July 2001, Napster was found against on all three claims. Napster is shut down. Napster declared bankruptcy in 2002 and sold it’s assets. Napster declared bankruptcy in 2002 and sold it’s assets.

5. Timeline 1998 MP3.com is founded 1998 MP3.com is founded Diamond Multimedia ships Rio PMP300 selling at $250 Diamond Multimedia ships Rio PMP300 selling at $250 October 1998, RIAA call the Rio a toll of copyright infringement. Diamond Multimedia wins case. October 1998, RIAA call the Rio a toll of copyright infringement. Diamond Multimedia wins case. June, 1999 Napster is released (begging of peer-to-peer file sharing June, 1999 Napster is released (begging of peer-to-peer file sharing December, 1999 lawsuits filed against Napster December, 1999 lawsuits filed against Napster March, 2000 Gnutella is publishes (first decentralized file sharing system) March, 2000 Gnutella is publishes (first decentralized file sharing system) October, 2000 Napster is credited by driving curtains albums up on the Billboard charts. October, 2000 Napster is credited by driving curtains albums up on the Billboard charts. March, 2001 FastTrack and Kazaa are introduced. March, 2001 FastTrack and Kazaa are introduced. July, 2001 Napster shut down July, 2001 Napster shut down August, 2002 P2Pnet is founded. Will grow to become one of the most popular media sites August, 2002 P2Pnet is founded. Will grow to become one of the most popular media sites October, 2004 RIAA files 750 lawsuits aimed at alleged copyright violators October, 2004 RIAA files 750 lawsuits aimed at alleged copyright violators June, 2005 US Supreme Court judges Grokster developers guilty of encouraging copyright infringement June, 2005 US Supreme Court judges Grokster developers guilty of encouraging copyright infringement September, 2005 WinMX shuts down after cease and desist from the RIAA September, 2005 WinMX shuts down after cease and desist from the RIAA 2006, major music file sharing crackdown in Sweden. 2006, major music file sharing crackdown in Sweden.

6. Who is trying to stop the crimes? Recording Industry Association of America (RIAA) Recording Industry Association of America (RIAA) What the RIAA does What the RIAA does What is the RIAA’s official stance on digital music piracy What is the RIAA’s official stance on digital music piracy How much does the RIAA estimate that the recording industries are losing How much does the RIAA estimate that the recording industries are losing

7. Impact of File Sharing On the Music Industry & Consumer Financial Impact Financial Impact Impact to the Artist Impact to the Artist Impact to Consumer Impact to Consumer

8. Financial Impact Common question Common question Consumer’s concern Consumer’s concern Artist/Record Label’s concern Artist/Record Label’s concern

9. Financial Impact CD Sales are Down 15% CD Sales are Down 15% Digital Music Sales are Up 49% Digital Music Sales are Up 49% iTunes 3 rd with 9.8% of Market Share iTunes 3 rd with 9.8% of Market Share Digital Music Sales estimated to gross 2.7 Billion by end of 2007 Digital Music Sales estimated to gross 2.7 Billion by end of 2007

10. Projected Future Financial Impact Analysts predict that by 2012 over a Third of all music sales will be digital Analysts predict that by 2012 over a Third of all music sales will be digital It is also projected that over the next 5 years CD sales will continue to decline, and digital music sales will rise to over 3.4 Billion dollars It is also projected that over the next 5 years CD sales will continue to decline, and digital music sales will rise to over 3.4 Billion dollars

11. Impact to the Artist  Wide Spectrum of Artists Smaller Up & Coming Artist Smaller Up & Coming Artist Wants exposure (Build fan base, concerts, merchandise, etc.) Wants exposure (Build fan base, concerts, merchandise, etc.) Generally want their music disseminated Generally want their music disseminated Generally lose revenue now, but hope it pay’s off Generally lose revenue now, but hope it pay’s off File Sharing is usually more of a positive impact File Sharing is usually more of a positive impact Larger More Established Artist Larger More Established Artist Generally don’t need exposure (Already have established fan base and album buyers) Generally don’t need exposure (Already have established fan base and album buyers) Want to make money today, there’s no payoff Want to make money today, there’s no payoff An illegally downloaded song, is just revenue lost An illegally downloaded song, is just revenue lost Usually File Sharing is viewed more negatively Usually File Sharing is viewed more negatively

12. Impact to the Consumer Consumer Beware! The Recording Industry Association of American (RIAA) means business! Consumer Beware! The Recording Industry Association of American (RIAA) means business! Jammie Thomas vs. RIAA Jammie Thomas vs. RIAA Only had 24 illegally shared songs on Kazaa Only had 24 illegally shared songs on Kazaa 1 illegally downloaded is breaking the law 1 illegally downloaded is breaking the law Cary Sherman, President of the RIAA Cary Sherman, President of the RIAA Feels they are stemming the tide of illegal file sharing by waging a war of lawsuits Feels they are stemming the tide of illegal file sharing by waging a war of lawsuits Legal digital music sales up, Legal digital music sales up, 7 Million illegal file sharers in 2003, only 7.8 Million in 2007 7 Million illegal file sharers in 2003, only 7.8 Million in 2007 Internet/Broadband Users up from 38 Million in 2003 to 80 Million 2007 Internet/Broadband Users up from 38 Million in 2003 to 80 Million 2007 37% of people new downloading music was illegal in 2003, now 73% of people know it is illegal today – Message getting out! 37% of people new downloading music was illegal in 2003, now 73% of people know it is illegal today – Message getting out!

13. Impact to Consumer  Bottom Line Impact to the Consumer If you want to acquire music legally, whether it be digitally or otherwise, you’re going to pay for it. If you want to acquire music legally, whether it be digitally or otherwise, you’re going to pay for it. If you are going to download music illegally, you may receive music for free, but you run the risk of penalty for doing so. It’s a simple matter of “Risk to Reward” If you are going to download music illegally, you may receive music for free, but you run the risk of penalty for doing so. It’s a simple matter of “Risk to Reward”

14. Methods of File Sharing Illegal Methods Illegal Methods Potential Risks Potential Risks Legal Methods Legal Methods Associated Costs Associated Costs

15. Illegal File Sharing Kazaa Kazaa Lite LimeWire WinMx Shareaza Morpheus BearShare

16. Risks of Illegal File Sharing Malware Malware Negative Effects on PC Negative Effects on PC Potential Lawsuits Potential Lawsuits Case Precedents Case Precedents

17. Malware Designed to infiltrate or damage a computer system without the owner's informed consent Designed to infiltrate or damage a computer system without the owner's informed consent Examples: Computer Viruses, Worms, Trojan Horses, Spyware, Adware Examples: Computer Viruses, Worms, Trojan Horses, Spyware, Adware

18. Lawsuits: RIAA vs. You? Interscope vs. Rodriguez (Sept. ’07) Southern California court found in favor of the defendant Judge ruled that “information & belief” of file sharing was not a sufficient claim

19. RIAA vs. Thomas Minnesota Oct. ’07 – Jammie Thomas found guilty of file sharing 24 music files Minnesota Oct. ’07 – Jammie Thomas found guilty of file sharing 24 music files First Jury Verdict First Jury Verdict Total Fine: $222,000 (9,250 per song) Total Fine: $222,000 (9,250 per song)

20. Legal File Sharing iTunes.99cents per song Limited PC Accessibility Napster 9.95 per month Extra programs required Yahoo Music 71.88 per year /5.99 month Subscription required to access songs MTV.com Free Limited selection

21. In Conclusion The “good ol’ days” of file sharing are gone – aka Napster The “good ol’ days” of file sharing are gone – aka Napster Don’t mess with the RIAA Don’t mess with the RIAA One way or another, file sharing is going to cost you. One way or another, file sharing is going to cost you.