04. Filesharing FAQs
i) The basics
ii) Legal action against filesharers in the UK
iii) The UK’s legal music download services
i) The Basics
What is filesharing?
Filesharing (NB: See footnote) is the activity of trading digital files with other users over the internet. Users trade files by downloading (to obtain them) and uploading (to distribute them).
How do people fileshare?
Users download software from the internet to gain access to a filesharing network. When the software is in use, and the user’s connection to the internet is open, the filesharer can trade music files (by uploading or downloading) with others who are online.
Is downloading music illegal?
Downloading is when an internet user obtains a digital music file from the internet – in filesharing this source is another internet user known as an uploader. Unless this act of downloading is done from with the permission of the record label (for example, from a licensed service like iTunes), it is unauthorised copying and is illegal.
Uploading is when an internet user allows other internet users to access (and download) their digital music files. This phenomenon creates an enormous illegal library of music available for illegal download using filesharing services.
Copyright law provides that a person must have permission to make a copyrighted work (such as a sound recording) available for download on the internet. Doing so (i.e. uploading) without permission of the copyright owner (in the case of a sound recording, the record label) is against the law, regardless of whether the music was originally obtained legally or illegally by the uploader.
It is for the illegal act of uploading without permission that the international recording industry has commenced legal action against more than 14,200 people to date.
Why is filesharing illegal?
British record companies invest tens of millions pounds annually in new artists, and recoup that by having the exclusive right to copy, distribute and make available their recordings.
Without copyright, labels would have no financial incentive to invest in new music and Britain would not have its world-beating music business. The Copyright, Designs & Patents Act 1988 grants various rights to copyright owners, and people who distribute copyrighted recordings via peer-to-peer networks without permission are breaking the law by infringing those rights.
It is absolutely clear in UK copyright law that unauthorised filesharing is illegal.
Specifically, filesharing runs counter to Section 16, which grants the copyright holder various exclusive rights, including the ‘exclusive right to copy and to communicate works to the public’; and Section 20, which provides that the exclusive right of communication to the public includes the ‘the making available to the public of the work by electronic transmission in such a way that members of the public may access it from a place and at a time individually chosen by them”.
Why is it a problem; does filesharing damage music sales?
Aside from the fact that filesharing infringes and undermines the rights of the creators and investors in music, it’s enormously damaging to music sales.
This area has been well researched, and while there is evidence that a small percentage of filesharers do download illegally to “try before they buy” this is more than outweighed by the much larger number who download legally instead of buying music.
If record companies are unable to derive income from music sales, that means less money to invest in new music. This is not only bad news for record companies but also for musicians who rely on that investment and for consumers, who want to keep on listening to exciting new British music.
I paid £10 for my CD, why am I not allowed to share it with my friends?
When you buy a CD, you buy a personal copy of the music; you do not buy the right to copy or distribute it.
Copying a CD and giving the copy to a friend is an infringement of copyright and is illegal. Uploading music to the internet is an infringement on a much larger scale, as filesharers effectively give away perfect copies of someone else’s work to millions of people for free.
Why not just lower the price of music?
British consumers can listen to music 24/7 on the radio without having to pay directly for it (radio stations pay royalties for the music they play). If consumers want their own personal copies of songs, then those have to be paid for to allow record companies to recoup their investment and invest in new music.
The price of music has already fallen considerably; 60% of CDs now sell for less than £10 in the UK, and at 85p the average download is cheaper than a hamburger and half the price of a latte coffee.
Genuine products are always going to be more expensive than free, because when you buy a counterfeit product nobody responsible for creating the product in the first place gets paid; attempting to compete on price alone with illegal free music would be the fastest way for record labels to go out of business.
What proportion of downloads in the UK are made illegally?
It’s very difficult to determine what proportion of downloads are illegal.
We estimate that around 8 million people are on filesharing networks at any one time. But this is a global figure, and lots of these people may be trading film, pornography or other material.
A TNS study in March 2004 suggested that as many as 7.4 million people in the UK have downloaded music illegally at one point, but many legal services have launched since then and awareness around illegal filesharing has increased.
While the majority of music downloading is still done illegally, the good news is that the growth in legal downloading is outstripping any growth in illegal filesharing. The number of infringing music files available on file-sharing networks has remained fairly static at around the 900 million mark over the past year even though the number of broadband lines installed globally grew by 13%.
How can you tell which websites are legal?
Although there are some online music services that claim to be legal when they are not, a careful consumer should not find it difficult to identify legal music services.
The usual indicators (quality, price, brand) should be taken into account and consumers should exercise caution. There is a list of authorised digital music services that consumers can view at www.pro-music.org.
BPI is working with the recording industry internationally to ensure that action is taken against unauthorised online distributors of music and filesharing services that illegally promote copyright infringement.
The US record industry recently won a landmark case in the Supreme Court against the filesharing service Grokster.
Consumers should take particular care in relation to filesharing services. Although distributors of filesharing software often claim that it is legal to download their software, using that software to download or upload music will almost always mean breaking the law.
There are also many websites that con users into paying for filesharing software that’s free elsewhere. Paying for the software does not in any way mean that using it to upload or download music is legal.
We advise consumers to err on the side of caution if they have doubts over a website’s legality.
If people don’t know what’s legal, isn’t it unfair to fine them?
IFPI surveys suggest that seven out of ten UK consumers are aware that filesharing is illegal. And the BPI has worked to raise customer awareness, notably in sending millions of instant messages to illegal uploaders and an extensive parental awareness campaign.
But distributing music without permission over the internet is against the law regardless of awareness.
An estimated 90% of the activity on filesharing networks is the illegal swapping of music and other works protected by copyright.
None of these filesharing services explain to their customers explicitly enough that using their services is extremely likely to be illegal and could land them in court, but the music industry is working to raise consumer awareness even if the file sharing companies are not.
Pop stars and record companies are rich; surely it won’t matter if I download one of their songs for free?
Everyone knows that it’s not legal to steal from someone just because they’re perceived to be rich, but this misses the point.
The real impact is felt by the record company who invested in the artists concerned and have to recoup on that investment to invest in new music.
In other words, it’s the new artists that are looking for record contracts that will suffer most, not established artists.
Besides, it's illegal and it's wrong, people have a right to be paid for their work.
Why are downloads more expensive in the UK than the rest of the world?
Retailers set prices, not record companies. But it certainly is true that the price of consumer goods is generally higher in the UK than elsewhere in the world.
British record companies employ British people to invest in British artists, which means paying British costs.
In relation to the cost of living, music is not any more expensive in the UK than in other leading markets such as the US and Japan. And whether a download costs 50p, £1.00 or £1.50, it’s still remarkable value for money to own a song you love for less than the price of a cup of coffee.
You said in the eighties that “home taping is killing music”. Isn’t this the same thing?
There is an enormous difference between giving a friend an inferior copy of a record, and illegally distributing perfect digital copies of songs to millions of people.
Filesharing cost the UK record industry an estimated £650 million in 2003 & 2004, which means millions of pounds less to invest in new artists.
Isn’t filesharing getting more popular?
The number of users on KaZaA, the file-sharing application most targeted so far in cases against infringers, is down 20% from an average 3.0 million to 2.4 million users between January and September 2004 – a decline of 41% from its peak of 4.1million users.
While some filesharers have migrated to other networks the key figure for the record industry is the number of music files that are uploaded illegally to the internet. This grew just 3% from 870 million in January 2005 to 900 million in July 2005 despite the fact that the number of broadband lines installed over that period grew four times faster at 13%.
ii) Action against filesharers in the UK
Who are you threatening with legal action?
After a prolonged period of warnings, the BPI has taken the decision to commence legal action against major uploaders – the “worst” filesharers in the UK.
The BPI is only able to identify copyright infringement at the level of the internet protocol (IP) address of the infringer; BPI then has to go to court to obtain an order requiring the relevant internet service provider to disclose to BPI the name and address of the owner of that internet account.
BPI then writes to the individuals concerned and offers them an opportunity to settle the legal claims against them before legal proceedings are issued.
How much music do I have to download to be at risk?
Although we have not yet taken legal action against anyone for the act of downloading - this too is illegal and we urge consumers to stick to legal services.
The BPI has so far taken legal action against major uploaders – people offering hundreds and sometimes thousands of files for others to download.
Even uploading one file is illegal, and there is no safe limit that will avoid legal action. However, those uploading large numbers of files obviously put themselves at greater risk of legal action.
Taking action against major uploaders makes sense as US research group NPD estimate that around 15% of filesharers are responsible for uploading 75% of illegal content to the internet.
Why are you threatening to sue your customers?
A customer is someone who buys from you, not someone who takes your products without permission and distributes them illegally to millions of strangers – and that’s what uploaders do.
What the music industry has done for its customers is invest heavily in digital distribution and UK music fans can download more than 1 million different tracks from at least 30 high-profile digital music services.
Could children find themselves in court?
There is no age below which copyright infringement becomes legal.
In the first instance BPI writes to the internet account holder, and internet account holders are generally not children.
If the account holder decides to disclaim responsibility and instead puts the blame on a child in their household, BPI will consider the facts of the case and decide whether to proceed against the parent, child or both.
It is very important that parents accept their responsibility to supervise their children’s activities on the internet help their children to understand how to use the internet without breaking the law.
Can a downloader go to prison?
So far the BPI has only brought civil proceedings against illegal uploaders; however, it does not dismiss the possibility of criminal proceedings in a sufficiently serious case.
Is the BPI lobbying to criminalise filesharers?
No. There are already provisions in law to bring criminal proceedings. But there are no plans to issue criminal cases.
Why don’t you close down the illegal download websites?
There are ongoing copyright infringement actions elsewhere in the world against various illegal download sites and filesharing services that promote copyright infringement.
This however, does not change the fact that uploading copyright material is against the law, and launching legal action against major filesharers is a key part of our campaign to ensure that our members’ rights are respected on the internet.
How do you find major uploaders?
When filesharing, the uploader’s computer transmits its internet location, so that the downloader’s computer knows where to download from.
The BPI simply logs on to the internet like any other user and looks for downloads. When we download a sample track that track comes with details of the IP address of the filesharer who is offering it. The BPI then obtains a High Court order that the internet service provider (ISP) which controls that particular IP address should disclose the identity of the owner of the computer in question. Having received those details, the BPI is able to initiate legal proceedings against the uploader.
Who has been caught so far?
To date (July 2005) around 14,200 major uploaders worldwide have been subject to legal proceedings. Around ninety cases have so far been launched in the UK with 60 settled by July 2005.
The people who have been caught filesharing in the UK hail from all areas of the country and are from all walks of life. Amongst them were the owner of an IT company, a local councillor and a student.
How much have people paid out?
To date (July 2005), more than 60 cases have been settled without the need for court action for an average of over £2,000. The largest amount paid to date is £6,500.
Is your legal campaign working?
Yes. The BPI sought to raise awareness that filesharing is illegal, and deter illegal uploading.
Nearly seven out of ten UK consumers are aware that filesharing is illegal, and illegal filesharing is being successfully contained.
Furthermore, independent studies such as Jupiter's April 2005 UK Music Consumer Survey found that 37% of currently active file-sharers in the UK have already started to cut down because of the fear of legal action.
What have you done to educate people about illegal filesharing before now?
Since the BPI’s US counterparts the RIAA took action against the original Napster in 1999, the BPI has reiterated that unauthorised filesharing is illegal.
The BPI wrote to hundreds of UK academic institutions and corporations to alert them to the dangers of illegal filesharing in 2003, soon after US record companies' trade association the RIAA launched its first legal action against illegal uploaders.
In March 2004, the BPI took the message straight to computer users’ desktops, sending instant messages to the users of p2p networks who were uploading music without permission.
After a year of warnings, the BPI took legal action for the first time in October 2004. To date (June 2005), we started the process of litigation against 88 UK filesharers and the issue has been a major media talking point since then.
In June 2005, the international music industry supported Childnet’s campaign to educate parents about the dangers of filesharing. The campaign included extensive leafleting in music stores and libraries in the UK and online marketing.
Millions of people download illegally; the odds of getting caught are very small so surely issuing a few hundred legal cases aren’t much deterrent?
It is true that the BPI cannot fine every filesharer in the UK, but the chances are far greater than the “million to one” that some have assumed.
The BPI has made it clear that it is not suing at random and is targeting the worst offenders.
And while we estimate that there are around 8 million internet users online at any one time, not all are uploading, and few fall into the "major uploader" category.
It's also worth pointing out that on discovering the identities of the alleged filesharers, eight of the IP addresses were in fact traced to four individuals. In other words, four filesharers were caught twice.
Far from “a million to one” – given that the BPI is continually monitoring filesharing activity, filesharers who are regularly online and uploading significant number of files are in fact likely to be caught.
What can people do to avoid legal risk?
The best way to avoid legal risk is to uninstall filesharing software and by buying music legally.
In any event, internet users should immediately remove the sharing feature on any peer-to-peer software they have installed.
Do artists support the legal action?
The legal action is brought on behalf of record companies – not artists.
However, many artists support the principle that they should be able to decide whether their work is paid for or given away for free.
iii) The UK’s legal digital music services
Why did the music industry take so long to launch licensed services?
The music industry have been criticised for “being slow to develop new business models”, but they are music companies, not technology companies or retailers.
The function of a record company is in brief to find, fund, record, promote and market music. Record companies fund that process by retaining the rights in the artists’ sound recordings; crudely speaking that is their business model.
The dotcom crash in the early 2000’s demonstrated clearly that you can’t just put something on the internet to make it profitable, but ever since the possibility of digital distribution emerged the industry has worked to make it a reality.
When the UK’s copyright law was updated to include protection for digital distribution in October 2003, the legal business gathered pace, but record companies need retailers to sell their products.
When leading US retailers iTunes and Napster launched in 2004, soon followed by the launch of the Official Download Chart, the marketplace for legal download sales began to grow rapidly.
Why doesn’t the music industry license to p2p?
The music industry is enthusiastic about p2p as a distribution technology. However, it must be used in the context of a business model that allows artists and creators to be paid for their work.
Now that technology is available that can filter out unlicensed content, record labels are licensing a new generation of peer-to-peer service (including companies such as Snocap and iMesh) that will offer the benefits of peer-to-peer distribution in a legal environment.
How big is the legal digital music business?
The legal downloads business still represents a very small percentage of the overall business, with BPI putting digital sales at around 2% of value.
But the progress is encouraging – at the beginning of 2004 weekly download sales were around the 18,000 mark, and by then end of the year that figure had grown to around 250,000 with 5.7m permanent downloads sold in 2004 compared with almost zero the year before.
In the first half of 2005, 10m legal downloads were sold in the UK – nearly twice the number for the whole of 2004.
Various research groups have made estimates of how big the digital business will be by 2008, with most forecasts around the 7-9% mark.
How much music can be downloaded legally?
There are in excess of 1 million tracks available on the various download services in the UK and that number is increasing all the time.
One of the great benefits of downloadable music is the fact that it makes a huge variety of music available to people wherever they are and whenever they want it – even if they live miles away from a High Street record store.
The available repertoire covers material both from the large international record companies and the smaller independents. Many of the larger independent labels are represented on the UK’s better known services such as iTunes and Napster, while services such as Tune Tribe, Wippit, Karma Download and Bleep.com specialise in indie repertoire.
Isn’t digital rights management restricting the growth of legal services?
No. Digital Rights Management (DRM) is the tool that enables music to be offered to consumers online in new and exciting ways.
For example, subscription services such as Napster To Go allow consumers to download more than one million tracks to a portable device – so-called MP3 players - for only £15 per month.
New business models such as this are only possible because of the flexibility offered by DRM.
Why won’t songs downloaded from legal services work on my iPod?
Since the legal download market is so new, it is inevitable that there is a variety of technical standards, not all of which may be compatible with each other. However the music industry is pushing for greater interoperability, so consumers can play whatever music file they buy on whichever portable device they own.
Ultimately full interoperability is something that can only be achieved by agreements among consumer electronics companies and online retailers. It is not something that record companies are in control of.
For the time being, iPods will only play unprotected MP3 files or songs downloaded from the iTunes Music Store. Likewise, some other digital music players on the market will only play music files downloaded from certain music stores.
We therefore advise any music fans to look carefully into what portable devices are compatible with the legal download services they intend to use before they buy.
If record companies don’t have to pay for packaging and distribution, why do downloads cost the same as CDs?
In fact, downloads generally cost less than physical CDs. The average price of an album download is £7.38 compared to £9.17 for a single CD album (TNS, 2005).
However, record company costs have not fallen as a result of online delivery. For as long as the CD still represents a major part of industry sales, record companies will still have all the fixed costs associated with physical manufacture and distribution.
They are also incurring substantial new costs in relation to online delivery, including digitisation of catalogues, creation of metadata, servicing a variety of online music services with different requirements and more.
But manufacturing and distribution only represent a small part of the costs of a record company in any event. The largest costs to record companies are the costs of identifying, supporting and promoting artists.
At an average cost of 85p per track downloads are extremely good value for money.
Is it true that filesharing is actually used by music fans to find deleted and obscure music?
Many filesharers have claimed that they only use the networks to find deleted music or music unavailable to download legally. Others have said that filesharing has led to them buying more music, and like radio, it’s in fact promotional.
But research has demonstrated time and time again that any promotional benefit derived from illegal filesharing is more than offset by those who buy less music because they can get it for free.
Downloading or uploading music is illegal regardless of whether or not it’s available commercially.
Is the BPI trying to reduce royalties for artists on downloads?
No. Artist royalties payable on digital sales are negotiated between a record company and the artist - and have nothing to do with the BPI.
The BPI has however, after 5 years of negotiation, failed to agree a royalty rate with authors' collecting society the MCPS after they attempted to double their royalty for digital formats. The case has been referred to UK arbitration body The Copyright Tribunal.
Why are independent record companies underrepresented on legal download services?
Major labels are by nature able to negotiate for the rights to large amounts of catalogue across multiple territories, so it’s not surprising that retailers seek to do deals with the major labels first.
But there are literally thousands of independent record companies in the UK, who represent about 25% of the market. They are likely to have different licensing arrangements across different territories for different artists, all of which makes the licensing process complicated.
The BPI worked hard to help its independent members get their music online and when the UK's combined singles chart was launched in April 2005 the vast majority of independent singles were available on the UK’s top three download services.
In addition, there are a number of services such as TuneTribe, KarmaDownload, Bleep.com, Wippit and more that all specialise in indie repertoire.
Although indies are generally gaining better placing in the new combined digital/ physical UK top 40 singles chart, the strength of the download services relies upon the depth of catalogue, and retailers and the record industry are working together to get more independent repertoire online.
*FOOTNOTE
Filesharing is a means by which individuals can make files on their personal computers available to others to download via the internet. This is illegal when copyright material is made available without the permission of the rightsholders; which, in the case of sound recordings, are the record companies that created them.
An estimated 90% of p2p traffic is copyright material (e.g. music, films, images, computer software), and for the purposes of this document, it is assumed that “filesharing” refers to the “the unauthorised sharing of copyright music”.
