Internet Piracy i

Running head: INTERNET PIRACY

Internet Piracy

7 December 2004

ABSTRACT

The Internet is a widely used technology that has emerged mainly in the last decade.
Confusing laws concerning the Internet and copyrights have created controversies relating to
downloading digital files. In addition, many artists disagree about the way music should be
distributed over the Internet. Many people are unaware of the current law and have little
knowledge concerning Internet piracy. This paper will address the reasons why downloading
files is a controversy, as well as what laws and court rulings have been made to enforce control
over Internet piracy.
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TABLE OF CONTENTS

LIST OF ILLUSTRATIONS...........................................................................................................v

GLOSSARY OF TERMS...............................................................................................................vi

GENERAL INFORMATION: SCOPE, PURPOSE, AUDIENCE, TRIAL THESIS...................vii

BACKGROUND: OVERVIEW OF DIGITAL FILES AND THE INTERNET............................1

The Internet as a New Way of Marketing............................................................................8

The Problem: Opposing Ideas..............................................................................................9

Confusing and Poorly Publicized Laws.................................................................10

Peer-to-Peer Networks and Freely-Traded Music ...............................................10

Producers Receiving Less Money on Sells.............................................................12

COPYRIGHT.................................................................................................................................13

First Sale Doctrine.............................................................................................................13

Fair Use Doctrine...............................................................................................................13

Audio Home Recording Act..............................................................................................14

The Digital Millennial Copyright Act.............................Error: Reference source not found

COURT RULINGS........................................................................................................................16

Napster Ruling...................................................................................................................16

Grokster Ruling..................................................................................................................16

EXAMPLES..................................................................................................................................18

Personal Copies..................................................................................................................18

Copy for a Friend...............................................................................................................18

Selling Purchased Music....................................................................................................19

Selling Downloaded Music................................................................................................20

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Downloading Music...........................................................................................................19

Playing Music at a Birthday Party.....................................................................................20

CONCLUSION..............................................................................................................................22

No Quick Solution...........................................................Error: Reference source not found

Users’ Discernment............................................................................................................23

Clearer Laws......................................................................................................................22

REFERENCES..............................................................................................................................24
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LIST OF ILLUSTRATIONS

Figures

1. Percentages of illegally downloaded songs from legal services......................................2

2. A portion of a webpage making deceitful claims about music downloading..................4

3. A chart clearly defining the legality of different scenarios................................................

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GLOSSARY OF TERMS

Audio Home Recording Part of the U.S. copyright law that allows for personal reproduction

of copyrighted materials under certain situations.

Bandwidth: The amount of information that can travel through a communication

path.

Download: To transfer a copy of a file to one’s computer from an Internet

server.

Fair Use: The concept contained in U.S. copyright law that allows for some

copying of materials for the purposes of criticism, comment, news,

reporting, teaching, scholarship, or research.

(www.library.uni.edu/orientation/glossary.htm)

Grokster: A peer-to-peer file-sharing program designed to distribute music

over the Internet.

Internet: A collection of networked computers from all over the world.

MP3: A compressed audio format popularly used for downloading music from the Internet

Napster: A peer-to-peer file-sharing program designed to distribute music

over the Internet.

Peer-to-Peer: A network model in which computers communicate directly with

one another.

Piracy: The copying or duplicating of copyrighted material without proper

authorization.

Rip: To copy the files from an audio CD onto a computer.

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BACKGROUND: OVERVIEW OF DIGITAL FILES AND THE INTERNET

In the United States, the usage of the Internet has grown greatly in the past decade.

According to a United States Census Report (2001), households with Internet access increased

from 18% in 1997 to 41.5% in 2000. Nearly 9 out of 10 school-aged children have access to

computers (2001). The Internet is used for many different purposes such as emailing, school

research, checking the news, playing games, and entertainment. The rapid emergence of the

Internet and computers has led to many issues concerning copyrights and illegal copying of files.

Confusing laws have been created that few people understand. It seems that people have their

own interpretation of the law and what is legal. If only the law was more clearly defined, and the

public was more informed, then copyright piracy would be more under control.

The Internet as a New Way of Marketing

One of the most amazing features of the Internet is how it transforms the physical world

into a virtual world. Books, papers, videos, and CDs can all be converted into files on a

computer. Those files can be placed on the Internet and be seen by hundreds or even thousands

of people at once. Practically anything that can be seen or heard can be digitized and placed onto

the Internet. Unlike the physical world, the virtual world can distribute nearly unlimited copies

for practically no costs. These copies can be distributed instantly. In the physical world in

which we live, laws have been set forth which have created a balance between copyright owners

and users. For the most part, copyright owners and users have agreed on the legality of

reproducing copyrighted items. With the introduction of computers and the Internet, complex

copyright laws have caused great discord between users and copyright owners (Amen 2002).

Users recognize the fact that digital files can be reproduced for free, and refuse to pay the

traditional cost of CDs for songs downloaded from the Internet. Copyright owners, seeing that
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the Internet can provide unbelievable profits, refuse to meet the user’s desired price. As a result,

there has been a continual controversy over how digital files should be handled. The debate has

two main campaigns. There are those who support the distribution of free music and believe that

copyright laws should help protect the rights of consumers. The opposing side is against free file

sharing and believes copyright laws should protect the creators. Music label companies have

filed lawsuits against companies, peer-to-peer networks, and individual users (Morris, 2004).

Just like a pendulum on a clock, the outcomes from these cases sway back and forth for the two

opposing groups.

The Problem: Opposing Ideas

The problem that arises with the virtual world of the Internet is that there is no control

over what is placed on the Internet. For example,
a school-aged boy takes his favorite rock group’s
copyrighted-CD and places it in his computer. He
Percent of illegally downloaded songs from users
who purchased CDs and song downloads from a
legal service in 2003 and 2004
100
80

rips the CD onto his computer into a shared folder 60

40
and then accesses the Internet. Since he belongs 64 %
20 42 %
to a peer-to-peer network, the files he saved into 2003 2004

his shared folder become accessible instantly from

Figure 1. Illegal Downloads.
anywhere in the world. This young school boy
Note. From “Sounds legal,” by M. Amdur,
has now broken the law by distributing
2004, May 24, Video Business, 24, 9.
copyrighted work. The problem extends even

farther than those consciously breaking the law.

Even users who purchase physical CDs and

subscribe to legal online music distributors

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acquire songs that are distributed illegally, as illustrated in Figure 1. In addition to the problem,

there are many artists who do want some of their songs to be distributed for free. For example,

the music group Counting Crows allows users to freely download songs from their website

(http://www.countingcrows.com/av.html). Consider the previous example with a small twist.

Instead of the boy ripping his favorite rock group, he rips a song from an album that he and his

band wrote. He wants to get everyone in the world listening to his CD. He views online

distribution as a great way to gain popularity and fame. This creates a problem because there is

practically no way to differentiate between those who want their songs distributed and those who

do not.

Confusing and Poorly Publicized Laws

Many laws have been created to help protect the work of artists. Unfortunately, there are

few people who have heard of the First Sale Doctrine, the Audio Home Recording Act, or Fair

Use. Even if people did know about these laws, they would not understand them if they read

them, due to the awkward writing of the laws. As a result, many people do break the law,

without any knowledge they are doing so. In addition to the confusing laws, various court

rulings seem to oppose each other. For example, Napster, a free peer-to-peer music trading

service, was found guilty in 2000 of infringing copyright acts by distributing copyrighted

material through their service(Landau, 2002). In 2003, Grokster, a free peer-to-peer music

trading service, was found not guilty of distributing copyright material (Garrity & Butler, 2004).

One may wonder what the difference was that allowed Grokster to survive and Napster to fall.

In reality, there was no major difference between the two. The only difference was how the law

was interpreted.

Peer-to-Peer Networks and Freely-Traded Music

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Many websites take advantage of the confusing law and court rulings to portray

downloading music and other digital

files as being 100 % legal. Such

websites are also 100 % scam. First,

they charge an annual or lifetime fee Are Music & Movie Downloads Legal? - YES!
Today, there are over 220 million users trading
to access a peer-to-peer network that MP3s & videos on these LEGAL file-sharing
networks. You can be assured that File-Sharing is
in nearly all cases is actually free. 100% legal, MP3s are 100% legal, and your
membership to MyMusicInc.com is 100% legal.
Second, they purposefully and
Graphic 2. “Legal” Downloads.
deceivingly portray music
Note. Taken November 15, 2004 from the website
downloading and file-swapping as
My Music Inc, <www.mymusicinc.com/legal.htm>
completely legal. Referring to table

2, notice the word choice describing

the legality of downloading digital

files. My Music Inc portrays all

music and movie downloads as

totally legal. What the website fails

to announce is that a great majority of

those 220 million users are illegally

trading MP3s and videos. Notice that

the “LEGAL” in all caps is referring

to file-sharing networks. Although it is true that peer-to-peer networks are legal, it does not

mean that they can be used for illegal purposes. A similar example is a gun. True, guns are

legal, but if they are used for illegal purposes, such as shooting someone, then the offender will
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be breaking the law. Similarly, peer-to-peer networks are legal, but users are still bound by law

to obey copyright regulations.

Producers Receiving Less Money on Sells

Unfortunately for producers, Internet piracy has led to great decreases in their sales.

Decline in sales result from ignorant internet users as well as those who knowingly download

copyrighted material, instead of buying CDs. Some campaigns have sought out to educate the

public about the law. An example of this can sometimes be seen in movie theaters. Before a

movie is presented, a short interview is conducted with a stunt man, camera man, or someone

else involved in the film-making industry. The purpose of the interview is to explain Internet

piracy to the public, and discourage the illegal downloading of movies. As long as the law

remains confusing, producers will continue to lose money on sells.

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COPYRIGHT

Copyright Law was first enacted in May of 1790. According to the U.S. Copyright

Office, the overall “purpose of the copyright system has always been to promote creativity in

society”( http://www.copyright.gov/circs/circ1a.html). In order to promote creativity, Congress

has set forth laws to protect the creative works of authors. As Gaustad (2002) points out, authors

receive money for their creative contributions, in hopes they will be motivated to produce more

original works. Original works can include anything from literary works, to motion pictures, to

choreography, to architectural works. As new technologies are introduced into society, laws are

modified to become more adequate. As a result, laws are hardly ever introduced with new

technology, but are developed in response (Gaustad, 2004).

First Sale Doctrine

The First Sale Doctrine refers to Title 17 section 109 of the U.S. Copyright law. It

claims, “the owner of a particular copy…lawfully made under this title… is entitled, without the

authority of the copyright owner, to sell or otherwise dispose of the possession of that copy.” In

more clear terms, the law states that anyone can sell copyrighted work without the consent of the

author, as long as it was a legally made copy. In addition, a consumer may not reproduce

copyrighted material for personal use and then sell the original. For example, a man cannot buy

a software program, load it onto his computer, and then sell the software to someone else. In

summary, only one person can have possession of the copyrighted work at a time.

Fair Use Doctrine

The Fair Use Doctrine creates a compromise between the owners of copyrighted work

and the consumers (Amen, Keogh, & Wolff, 2002). According to the U.S. Copyright Law, Title

17, Chapter 1, Section 107 (www.copyright.gov/title17), copyrighted material may be

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reproduced “for purposes such as criticism, comment, news reporting, teaching (including

multiple copies for classroom use), scholarship or research.” Since the enactment of this law, it

has extended to allow for other uses, such as “personal copying for convenience” (Landau, 2002,

153). According to Amen, Keogh, and Wolff (2002), four main questions determine a score of

whether or not a reproduction of a work is protected by the Fair Use Doctrine. They are as

follows:

1. What is the “purpose and character” of the use? Higher points for educational, lower

for commercial.

2. What is the nature of the work? Higher points for nonfiction, lower for fiction; higher

points for published, lower for unpublished.

3. How much of the copyrighted work is being used? Higher points for brief excerpts,

lower for whole chapters.

4. What is the effect of the use on the market for the work? Higher points for spontaneous

classroom use of out-of-print material: lower for assigned reading from an in-print

textbook. (p. 23)

Although the Fair Use Doctrine has specific guidelines, in many cases it is unclear as to what is

really protected by this law. Landau (2002) explains that in the Supreme Court case, Harper &

Row Publishers Inc. v. Nation Enterprises, the reproduction of 300 words from a 200,000-word

manuscript was enough to be considered copyright infringement. He continues to explain that

the 300 words taken were the main substance of the work, and therefore not protected by the Fair

Use Doctrine.

Audio Home Recording Act

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The Audio Home Recording Act was added to the Copyright Law October 28, 1992, as

Chapter 10 of Title 17. Landau claims that with the introduction of new technology, record

companies were worried that they would lose market share to devices that could reproduce

lossless recordings (2002). As a result, the Audio Home Recording Act was introduced to

compensate the copyright holders for the losses they may have due to the new technology.

Royalties are collected whenever a digital audio device or digital audio recording media is sold.

As a result, a balance was found between recording companies and consumers. Landau

continues to explain, “Individuals may make convenience-related ‘personal, non-commercial’

copies; copyright holders receive a royalty. Again, legislation has been introduced in order to

maintain a healthy market for the copyright holder’s work.” (p. 157) Section 1008 of this Act

claims:

No action may be brought under this title alleging infringement of copyright based on the

manufacture, importation, or distribution of a digital audio recording device, a digital

audio recording medium, an analog recording device, or an analog recording medium, or

based on the noncommercial use by a consumer of such a device or medium for making

digital musical recordings or analog musical recordings. (Section 1008)

One common misconception of this act is that it includes computers. Since computers are not

made specifically for recording digital audio, they are not included under this act (Section 1001).
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COURT RULINGS

There are two court rulings that have played key roles in the battle to control Internet

piracy. Both Napster and Grokster are file-sharing, peer-to-peer networks that allow people to

download music files. The setup of the two networks is practically the same. The way the

networks run are as follows.

1. Users type in a request for a song they want to download.

2. The service finds the file from other people who are hooked up to the network.

3. The service connects the requester and the sender computers together.

4. The requester receives the file download from the sender, independent of the service.

The difference between Napster and Grokster is very small. The results from the court rulings

were had drastically different impacts.

Napster Ruling

Several recording companies, some of which include A&M Records, Sony Music

Entertainment, MCA Records, Capital Records, and Virgin Records America, sued Napster in

December 1999 for copyright infringement (Zepeda, 2002). Napster claimed to be protected by

fair use and by the fact that there were many legal purposes for their service (Zepeda, 2002).

According to Zepeda, the record companies may have owned the rights to more than 70 percent

of the files downloaded over the Napster service (2002). In addition, “Napster did notown

licenses to distribute, download, or to facilitate others in the distributing or downloading any of

the copyrighted music” ( Zepeda, 2002, p. 76). In August 2000, the court ruled Napster guilty of

copyright infringement. Napster was ordered to stop all transmission of music files for which

they did not have the express permission from the author (Zepeda, 2002).
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Grokster Ruling

Just as Napster was sued for copyright infringement, Grokster was also targeted for

similar offences (Garrity & Butler, 2004). August 19, 2004, Grokster, unlike Napster, was found

not guilty of copyright infringement (Garrity & Butler, 2004). According to Garrity and Butler,

the court ruling will possibly promote more peer-to-peer networks, claiming to be protected by

law (2004). Indeed, many services do make this claim. For example, iMusicSearch.com,

MyMusicInc.com, EZMP3s.com, and MP3DownloadHQ.com all make references to this court

ruling, suggesting that all MP3 downloading is completely legal. The ruling was viewed as a

major setback to control illegal downloading and Internet piracy (Garrity & Butler, 2004).
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EXAMPLES

In order to explain typical scenarios that occur in daily life, simple examples have been

included to discuss the different issues that arise about copying files. Many questions

concerning copying files are highly debatable. The following examples depict concepts that are

generally agreed upon as being accepted or not accepted.

Personal Copies

Suzy loves to listen to music on her portable CD player while she runs. She decides to

take all her favorite songs and copy them onto one CD so that she will not have to change her

CDs all the time. She tells her mother of her new exciting idea, but her mother gets very

disappointed and says, “Suzy, I am disappointed in you. I thought you were a law-abiding

citizen. You shouldn’t make illegal copies of songs.” Suzy, about ready to break into tears, runs

into her room. Suzy emails her best friend, Jill, and tells her all her problems. Jill quickly

replies, telling Suzy everything is alright. Jill assures Suzy that it is not against the law to make

personal copies of CDs.

Although it is sometimes a belief that making any copies of copyrighted work is illegal,

according to the Fair Use Doctrine, personal copies are permitted for non-commercial purposes.

Copy for a Friend

Jeff and Mike are great friends and serious fans of the music group U2. While at the

store, Jeff sees the newest CD available from U2. He purchases the CD and returns home. He

calls up Mike and tells him of the great news. Mike goes ecstatic, and insists that Jeff makes him

a copy of the CD. Jeff figures that since he will not charge Mike any money, it is alright to make

him a copy. He thinks of the situation as being “non-commercial.” While Jeff is waiting for the
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CD to record, his conscience starts questioning his actions. He begins to feel guilty about what

he is doing. Should he?

Although Jeff is not charging Mike for the CD, it does not matter. He is still breaking the

law. In the simplest terms, only one person may possess the copyrighted material.

Downloading Music

While typing an email to a friend, Sally sees an advertisement for unlimited free music.

She finishes her email and clicks on the link. She is brought to a webpage that claims its service

is “100% Legal.” Sally, excited that she has found such an amazing deal, downloads the

software and begins downloading all the popular songs she has always wanted. She is amazed at

all the “legal” songs that are available. She continues off and on for the next couple of months

downloading her favorite new hits. One day while eating lunch, Sally hears a knock on the door.

She opens it, to find to police men at her door. Where did Sally go wrong?

Even though Sally had good intentions, she fell victim to one of the prevalent scams of

the Internet. There are many websites that deceitfully claim to be entirely legal. They even

portray the downloading of their music to be legal. This is a complete lie. They do not clearly

inform users that they are breaking the law if they download copyrighted works.

Selling Purchased Music

Ted is a college student who is a little short on money. One day, he thinks of a way to

make a little money. He decides to buy CDs that he can get for a cheap price, listen to them for a

while, and then resell them at a higher price. This way, he can enjoy listening to new CDs and

he can also make a little bit of money. After buying and reselling CDs for a couple of months,

Ted’s girlfriend notices that he has more money. She asks him how he has been so successful,

and he tells her of his little business. She tells him that he is breaking the law for two reasons.
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First, she says it is illegal to listen to a CD and then sell it to someone else. Secondly, she claims

that reselling music in general is against the law. Should Ted shut down his business?

In this example, Ted has done nothing that infringes the law. Everything that he has done

is legal and protected by law. He is protected by the first sale doctrine. This law states that

anyone may sell that which has been sold to them, provided that they do not keep any copies for

themselves.

Selling Downloaded Music

Nancy is another student at Ted’s school who is low on money. After seeing Ted be so

successful, she devises her own plan to make money. She searches for free legal music from

popular music groups on the Internet. After compiling a couple CDs from these songs, she sells

them to classmates for a couple of dollars each. One of her friends at school confronts her and

tells her she is breaking the law. Nancy claims that she is simply doing that which Ted was

doing, and she is protected by the First Sale Doctrine. Who is right?

Nancy’s friend was right. Although Nancy was doing something similar to what Ted was

doing, there is a distinct line of legality separating the two. In Ted’s business, he owned the CDs

that he was reselling to others. For Nancy, she did not own the music that she had collected.

That music has been set apart for the public domain, or all to have, and cannot be sold for profit.

Playing Music at a Birthday Party

School is soon ending. Dave wants to throw a huge end-of-the-year party. He calls a

couple of DJs and begins to get discouraged because of the expensive costs he had not

anticipated. Instead of using his entire budget for a DJ, he decides to be his own DJ and spend

the saved money on food and drinks. The party is a huge success with Dave as the DJ. About

half way into the party, an angry neighbor enters and begins to yell at Dave. The neighbor
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argues that Dave is being too loud, and even worse, he is breaking the law by playing music at a

party without a license. Is the neighbor correct in his assertions?

Although Dave may have had his music blasting a little loud, he was not breaking the law

as the neighbor had claimed. Dave was using the music for his own personal use. Although

others friends were there, it was still a private party. If the neighbor was correct, people would

have to turn off their CD players whenever a friend came over.

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CONCLUSION

The problems of Internet piracy will not quickly disappear. According to Morris, “the

value of lost sales to the industry from unauthorized music copies will rise from $2.4 billion in

2003 to $4.7 billion in 2008” (2004). One main reason there will be such an increase is because

“Consumers' respect for the value and integrity of original copyright works has been

fundamentally, and perhaps irrevocably, destroyed” (Morris, 2004, p.1). The solution to the

problem will be found through new technologies, user’s discernment, and clearer laws and

publicity.

New Method of Marketing

New technology may be developed to help control illegal distribution and reproduction of

copyrighted material. In addition, there will also be technology that will undo that which has

been protected. Instead of trying to battle new technology, there may be more beneficial ways of

solving the problem. Zepeda explains, "While technological advances will make copyright

infringement and piracy a continuing concern for the music industry, one possible solution to

these problems may be to adopt a new business model”(2002, p. 88). He continues to explain

how a more effective solution may be to design a marketing plan that utilizes the new

technology.

Clearer Laws and Publicity

In order to gain greater control over Internet piracy, congress will need to create clearer

and simpler laws that are well publicized. The government cannot expect people to always

understand laws when new technologies emerge. To do so would be the same as expecting a

friend to know how to play a game they have never heard of before. It is difficult to play a game
 Internet Piracy xxiii

when the rules are complicated or unknown. In addition, the laws should be clearly explained,

giving specific examples when needed.

Users’ Discernment

At the present time, the Internet is saturated with scams that make deceitful claims about

downloading music, movies, and software. Unfortunately, it is often difficult to discern between

the websites that are legitimate and those that are not. Users must carefully look for hints that

give away scams. A site that provides “unlimited” downloads for a fixed price is most likely a

scam. A free service that offers the latest box-office-hit is also most likely a scam. Although

some of the peer-to-peer networks provide purely legal music, most of them provide both legal

and illegal music. Some networks distinguish the legal music from those that are not. In all

cases, users must cautiously decide which files to download to avoid infringing the law.
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REFERENCES

Amdur, M. (2004, May 24). Sounds legal. Video Business, 24, 9. Retrieved September 13, 2004,

from EBSCOhost Computer Source database.

Amen, K., Keogh, T., & Wolff, N. (2002). Digital copyright. Computers in Libraries, 22 (5), 22-

27. Retrieved September 13, 2004, from EBSCOhost Computer Source database.

U.S. Census Bureau. (2001). Home computers and internet use in the United States: August

2000 (Publication No. P23-207). Washington, DC: U.S Government Printing Office.