A Pirate’s Life for Me

Will Turner: You didn’t beat me. You ignored the rules of engagement. In a fair fight, I’d kill you.
Jack Sparrow: That’s not much incentive for me to fight fair, then, is it?

It is eerie how the sentiment of a fictional swashbuckler from the 1700’s still rings true with a completely incongruent pirate culture today. What is the incentive for consumers today to legally acquire their music? “I don’t blame the consumer,” said Sandy Montiero, head of Universal Music Group Malaysia. “If it’s good quality and cheap, you’d want it (Whitley, 2006).” The answer to Montiero’s rhetorical question comes up a resounding yes; this consumer generation does want it.
The RIAA (Recording Industry Association of America), however, does not have a single target in their sites to make this new pirate culture walk the proverbial plank. Efforts to destroy piracy have targeted content aggregators, private individuals, universities, Internet Service Providers (ISP’s), software developers and the federal government.

Piracy exists in all forms of media, whether it be the film industry, video games, or even in print. However it is the music industry and the RIAA that has brought the issue to the forefront of society’s consciousness. They have demonized the practice to a level as to relate the act of piracy as a gateway to “everything from handguns to large quantities of cocaine and marijuana” as well as terrorism, according to published reports (Norton, 2008).

Music piracy does not begin or end where many people believe. Napster, Kazaa and Limewire were not the first technological threats on the RIAA’s radar. When personal cassette tapes were made available to the public and hit their peak in the mid 1980’s, the recording industry griped their business would by crumbled by individuals’ ability to record songs off of the radio (Steal This Film, 2006). Obviously no such catastrophic effects were felt by the industry as they continued to thrive into the new millennium. The threat, however, was not a technological impossibility. The technology and equipment was there for the majority of people to capitalize upon. So what kept such a revolt squashed?

Although it is fun to speculate conspiracy theories about “The Man” keeping the artist down and the industry up, Anders Bylund of Ars Technica assesses the situation from a business perspective. He explains consumers make purchase decisions based off of three factors: price, convenience, and quality (Mitchell, 2008). Applied to the cassette model, the recording industry merely needed to strike the proper balance to entice the majority of consumers to continue purchasing albums instead of recording them. Because of the existence of the technology, there would always be a group of people who would form a culture of defiance and not purchase their music. However, by creating a superior recording that grouped all of an artist’s tracks on one medium and then offering that product for a price that the market was willing to pay for this convenience and quality, the record industry was virtually unfazed. In fact, they continued to boom through the heyday of the compact disc in the 1990’s.

Online piracy, however, has created a new breed of monster for the recording industry. According to a study done by the Institute for Policy Innovation, piracy has cost the industry over $13 billion. The American economy suffers as well, citing the loss of 71,060 jobs with 26,860 of those coming directly from the recording industry, amounting to a cool $2.7 billion in lost earnings. Not to be swept under the rug is the $422 million in lost tax revenues at both the state and local levels (Siwek, 2007). These numbers alone are alarming. The picture they paint, however, must be examined from the correct perspective.

The calculation of these figures is not at issue. The derivation of the formulas used to propagate these results is of concern, however. In principle, the recording industry does not lose money every time a user downloads a song. Financial loss extrapolations are based upon the idea that a song downloaded illegally is a product the user has not purchased. This is based upon the assumption that the user would have bought the product had it not been available for free download and that they are not inclined to purchase it after it has been downloaded. The IPI does admit that:

“…the degree to which these legitimate purchases would occur differs by market, [but] it appears nevertheless that such purchases would comprise a very significant fraction of the total number of pirated CDs now purchased… It is then assumed that only 20% (1 in 5) of these downloaded songs would have been purchased legitimately if piracy did not exist (Siwek, 2007).”

Actual statistics, however, do not match up to these assumptions. In a 2006 study, three out of four users said they purchased the same music after illegally downloading, with 21% confessing they had done so ten or more times. Of this same cross section, 67% of the average user’s music library consisted of tracks ripped from CD’s, purchased online, or downloaded from an artist’s website. Peer-to-peer (P2P) downloads accounted for the last 33% of an average music library (Fischer, 2006). While not an insignificant number, this figure lies in contrast to those presented in the IPI study. The interpretation of each set of figures in the respective studies can be argued endlessly, but remain unimportant to the real issue: the approach towards piracy from the industry.

Court proceedings have been a mixed bag of results. The RIAA sent out 407 pre-litigation letters to 18 universities, citing specific IP addresses used to illegally obtain music. The schools were asked to distribute the letters to the proper students who were assigned to the addresses. Some schools, such as TCU, abided to the requests, leaving students disgruntled for the lack of support. “Don’t shoot the messenger,” said Brooke Scogin, assistant dean of campus life. “I personally sent out the letters to the students and attached the settlement letter from the RIAA (Blease, 2008).” The settlement packages ranged from $3,000 to $5,000, generally a healthy deduction from the $750 per pirated song damage formula constructed by the legal representation at the RIAA (RIAA, 2008).

Not every student is jumping at the chance to settle, however. Kevin Cabla a junior finance major at TCU, does not believe he is obligated to take any action until he receives more information. “The RIAA only has my licensed IP address and if they want to sue me they will have to subpoena TCU for my information (Blease, 2008).” Such attempts by the RIAA have yet to turn in their favor, as both the College of William and Mary and the University of New Mexico won similar cases in court and were not required to hand over any student information (Blease, 2008). The RIAA’s only case brought to trial against a file sharer also turned out to be their only major victory; for now. Jammie Thomas was fined $222,000 for “making available” 24 songs on the Kazaa network. Professors, however, are now arguing the presiding judge erred in his decision, as they interpret the copyright law to require proof of distribution to constitute such a claim, a technological quagmire (Kravets, 2008).

Montiero explains, “What we’re trying to do is get piracy to a level where the industry can thrive again (Whitley, 2006).” In Bylund’s opinion, threats of legal action and lawsuits only work to destroy the industry’s image in the face of their consumers. “You subject these rebels with the tools of free enterprise. Piracy is just another business model, and the pirates will lose and go away when you come up with a better model…Capitalism, properly applied, will beat the rebels every time (Mitchell, 2008).” The problem is, no one can seem to agree on the proper model. The recording industry remains in a constant battle with ISP’s over who should be responsible for monitoring the problem and creating a solution.

Industry players continue to lobby for an Internet surcharge. This extra monthly fee would be distributed back to participating labels to curb their piracy losses. A proposed $5 per month fee for developed countries would create a hefty nest egg of approximately $20 billion (Bruno, 2008). With such a payment system in place, access and software interface would be available to provide unlimited user downloading, or in theory, a monetization of piracy. ISP’s are not quick to jump on board as they stand to lose much more than they would gain from such a deal. Change would have to be legally mandated across the board, otherwise one service provider refusing to sign on to the deal can prospectively create a situation to capitalize on consumers abandoning ISP’s who would carry such a charge. This is especially true for the millions of users who do not download music, as they would surely not be willing to pay for other people’s music.

This model is also problematic for the industry itself, as the huge cash purse needs to be divvied up. Recording labels are at war with their artists as they try to determine a suitable rate model for downloads as a purchase or performance substitute. Currently the difference is a large, as artists receive 15% on a purchase and 50% on a performance, creating a heated debate as to how Internet downloads are to be handled (Bruno, 2008). The only evidence of any formative solution being an immediate possibility is a tiered subscription structure being proposed by ISP’s AT&T and Time Warner. This system would charge heavy bandwidth users at a premium rate and low bandwidth users at a lower cost. None of these plans have become available yet.

With no solution in sight, the battle continues to be waged over how to police the problem. The RIAA continues to track and subpoena information, but the technological logistics of such an operation are far too complicated and vast to accomplish more than throw a few lawsuits at college students. In the United States, the RIAA has resorted to fruitless civil action against Internet giants Google and YouTube for aiding the pirating culture through their products. With little bite behind these claims, they have also have implored ISP’s to police their own networks for pirate activity. Once again, however, such a measure would only be logistically and economically sensible if it were to be mandated by the government, as all the burden of cost for such an initiative falls onto the ISP’s (Bruno, 2008).

In other countries, there has been mixed results through business and governmental decisions. In Italy, Germany, Denmark and Canada, little progress has been made on either front as ISP’s voice a need for a business solution and courts have ruled on the behalf of user privacy over industry rights. In France, a three-strikes legislation has been passed that will place the burden of surveillance on the government, an agreeable situation for the ISP’s. Those found in violation of the law will face steeper penalties for each offense. As a result of industry pressure in Japan, the four major ISP’s have agreed in principle to develop a plan to curb users file sharing. Such a market solution in the United Kingdom has been given a timetable, as Parliament has said legislation will be introduced in April 2009 if the service providers cannot agree on a common solution (Eliezer, et al., 2008).

With this kind of government intervention not yet present in the United States, some groups have taken to the fight themselves. ArtistDirect Inc., a promoter of independent bands, owns a media task force known as MediaDefender. This group policies the Internet and attempts to foil illegal downloading for clients in the music and film industry. Their main tactic is to place phony files on P2P networks, clogging up the flow of information and making it harder for users to find what they are looking for. Their tactics, however, have come into question recently as an attack on a legitimate BitTorrent tracker run by Revision3 caused a full outage of their online television shows, including popular titles Diggnation and Tekzilla. Jim Louderbeck, CEO of Revision3, was concerned by the implications of such actions where operations such as these are allowed to operate without boundaries and cripple servers at will. “At the very least, it was a pretty poor implementation and pretty grossly negligent. What if these computers had been at a hospital (Menn, 2008)?”

The new BitTorrent technology, a P2P interface that allows users to download bits of media from different users, has created new problems for the RIAA, MPAA, and video game industry alike. Creators of The Pirate Bay, a major BitTorrent aggregator, believe the answers lie in the shift of social change. They call the act of piracy an “organized civil disobedience”, as people voice their desire to get their entertainment for free. The RIAA has had very little success in their efforts to crush the Pirate Bay, as the Swedish based company lies outside American jurisdiction. Continued pressure from the WTO on the Swedish government to handle the situation has been backed by the promise of sanctions. As a mediator, however, the Pirate Bay’s actions are not directly unlawful, as they do not post files (Steal This Film, 2006).

Their platform of social change does hold merit within the facts. When Swedish authorities raided the Pirate Bay servers in 2006, the system was up and running again within a week. Now the creators say the network is too big and can never be shut down. Even if the Pirate Bay was to be eliminated, the interface still works and can be used around the world. Not allowing information to be shared is a kind of “terrorism of the mind” in their eyes. They feel social change cannot be outlawed, and the continued repression of the network only makes their initiative more effective. “It’s all about control and profits,” says one creator. “When the industry loses control of the information, they lose their leverage to make profits… Consumers can now become producers. Here, only positive social effects can come from the addition of new authors into society (King, 2007).”

Is that the real answer though? Many artists do not appreciate having their work repurposed without receiving the financial benefits of their labor. Advocates for change would argue once the work is changed, it no longer belongs to the original author. Radical idealists would suggest the work does not belong to anyone, but society in general. At some point, all work has to be funded by some means, which would suggest that there must be some protection in place for artists and companies that foot the bill to provide us with these cultural works.

Therefore, it is not surprising the RIAA is in such a panic about the current situation of piracy and copyrights infringement. Whether or not their course of corrective actions is effective is immaterial. Likewise, the legality, ethical and social questions regarding the act of piracy cannot be explained in a single statement to encompass its legitimacy, or lack thereof. What is clear is that until business and society meet in a common place regarding the issue, it will always cause problems. With the technology in place there will always be pirates. If legal action is not an effective solution to curbing the issue, a more comprehensive and acceptable business solution must be the answer. Without this, societal choice will work to cripple the industry, but only if it chooses to do so.

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