|Recording Industry Sues Individual Music File-Sharers (Update3) |
Sept. 8 (Bloomberg) -- The music industry sued 261 people who each have distributed 1,000 or more song files on the Web, opening a new legal front against piracy that companies say cost them $700 million in the first six months of the year.
The Recording Industry Association of America, which represents the five largest record labels, is suing what it calls ``egregious infringers'' to discourage them from posting music online that others can copy. The industry says 2.6 billion songs are illegally shared over the Internet each month.
The industry is trying to stem more than three years of falling sales that analysts attribute to piracy and companies' failure to spur demand. Today's suits follow cases against businesses such as Napster Inc. that facilitate file sharing. The industry also is promoting its own online services and Vivendi Universal SA last week cut compact-disc prices.
``There aren't any silver bullets for this problem,'' said Mike McGuire, a research director at Gartner G2.
The RIAA may sue as many as 1,000 people who have posted songs others can pirate in coming weeks, Cary Sherman, president of the RIAA, said on a conference call today.
The RIAA plans to offer amnesty to online file sharers if they agree to erase illegal files and allow their names to be put into a database. Details of the amnesty offer are posted at musicunited.org .
The Washington-based group declined to disclose any details about the people it sued in federal courthouses across the country.
``We think this is part of a comprehensive approach,'' Zach Horowitz, president and chief operating officer of Universal Music Group, said in an interview. ``Ultimately, all of these things are geared toward creating a level playing field for the legal, online music stores.''
Universal, owned by Vivendi, is the world's biggest music company. Music labels currently are selling songs online with services such as Apple Computer Inc.'s iTunes Music Store, AOL Time Warner's MusicNet and RealNetworks Inc.'s Rhapsody.
The industry's first legal efforts to cut piracy targeted companies that facilitated file sharing. The RIAA's suit against Napster helped drive the company to bankruptcy.
The industry has sued the other companies, which use peer-to- peer systems that lack a centralized server, that have stepped into the vacuum.
Earlier this year, a federal judge in Los Angeles ruled that file-sharing-software companies Morpheus and Grokster aren't liable for contributing to copyright infringement. That loss, the entertainment companies' first in court after shutting down Napster and Aimster, prompted them to reevaluate their legal strategy.
In January, a federal judge gave them the means to sue individuals, ruling that Internet service providers such as Verizon Communications Inc. must reveal the identity of any subscriber suspected of pirating songs and movies over the Web. The RIAA has since sent out more than 1,500 subpoenas to ISPs.
The RIAA earlier this year took four university students who operated what it called ``Napster-like'' Internet sites to court. The four students each agreed to pay amounts ranging from $12,000 to $17,500 and shut down their file-sharing Web sites.
The music and movie industries are also trying to change a culture that has tolerated, and in some cases celebrated, music- sharing pioneers such as Shawn Fanning, who created Napster's software.
The companies have run advertisements in newspapers, magazines and movie trailers. They've sent more than 4 million instant messages to file-swappers to warn them that their activities are illegal.
The suits announced today are part of the program to keep music pirates from feeling they're anonymous. It's an effort to ``affect deterrence,'' Sherman said.
``It's really a public relations campaign more than anything else -- 261 lawsuit aren't going to solve the problem,'' said Gary Benton, a lawyer with Coudert Brothers in Palo Alto, California.
The Electronic Frontier Foundation, a civil liberties group that has opposed the RIAA's efforts against file-sharing services, said it would prefer the industry look into alternative solutions such as a compulsory license or a flat fee that would be divided among artists.
With potential fines of $150,000 per copyrighted work, the RIAA lawsuits are ``aimed at scaring people,'' said Wendy Seltzer, a staff attorney for the foundation. ``Instead of treating customers like criminals, they should appreciate that 60 million people appreciate the flexibility of file sharing services,'' Seltzer said.
Sony Music spokesman John McKay didn't immediately comment on the lawsuit; Sony is the second biggest by music sales in North America. Patrick Reilly, a spokesman for Bertelsmann AG's BMG unit, which is the fourth largest, didn't immediately return calls seeking comment.
AOL Time Warner Inc.'s Warner Music ranks third and Warner spokesman Will Tanos declined to comment. Amanda Conroy, a spokeswoman for EMI Group Plc, the fifth-largest and the only independent, publicly traded music company, didn't immediately return a call.
Last Updated: September 8, 2003 17:17 EDT