Will I Have to Pay $222,000?

Oct. 5, 2007 — -- A collective shiver went up the spines of a generation of digital music users when a woman was ordered Thursday to pay more than $200,000 for sharing music files on a peer-to-peer network, but legal experts disagree about how the verdict could affect the average consumer.

The lawsuit, filed by the Recording Industry Association of America, the record-label lobbying organization, accused Jammie Thomas of Minnesota, of sharing more than 1,700 songs on the peer-to-peer file-sharing network Kazaa. The suit contended that Thomas had violated the Digital Millennium Copyright Act by distributing songs for free that belonged to the record labels. In effect, the organization alleged, she had infringed upon the labels' copyright.

Do the Crime, Pay a Fine

The case, the first lawsuit of more than 26,000 the lobbying group has filed against file sharers to make it to trial, was meant to send a message, David Chidekel, a principal at law firm Fish & Richardson, experts in digital copyright law, told ABCNEWS.com. That message to file sharers, he said, is to change your ways.

"If you get a notice from the RIAA [Recording Industry Association of America], the labels, whoever, telling you to cease and desist, you want to settle very quickly for not a lot of money. That was the point of the lawsuit," Chidekel said. "It's a balancing test. The industry doesn't want to punish consumers, but [it] needs to enforce [its] rights. 'If we catch you, stop, say you're sorry, pay us.'"

Most of the group's suits have ended in out-of-court settlements for typically no more than a few thousand dollars. Thomas chose not to settle and the labels came at her with "barrels loaded," Chidekel said.

For those who are already participating in file-sharing networks, Chidekel advised them to stop. Parents should get their kids to stop downloading songs, too. But even then, once files have been shared, even if hard drives are erased or replaced, both of which were alleged to have occurred in the Minnesota case, the sharer could still be found liable for their actions.

Currently, 7.8 million U.S. households download files via peer-to-peer networks, according to the group. The organization's lawsuits have had a prohibitive effect, according to research firm NPD and Pew Internet and American Life, which have found that people who have stopped file sharing did so out of fear of lawsuits.

"I used to share music files about 10 years ago when it was all a much more archaic system using coded requests sent by instant message. I quit out of paranoia when Napster started coming under legal scrutiny," said Jamie S., 26, a writer and editor in New York. "For me, the potential savings are not enough to outweigh the risk — real or perceived — of getting caught. This goes doubly now that iTunes and the like allow single-track purchases."

But not everyone agrees with Chidekel's analysis of the impact of the case.

"I personally think this is an aberration. The verdict is completely irrational and unconstitutional," said Ray Beckerman, a partner at law firm Vandenberg & Feliu and the founder of the blog Recording Industry vs. the People.

Though Beckerman agrees that the verdict opens file sharers to lawsuits, he doesn't believe that the verdict will stand.

"I would say not to overreact. There's going to be a lot of litigation in this case," he said.

But, he quickly added, "I advise everyone not to infringe copyright."

One issue that Beckerman has with the lawsuits is that thus far the lobbying group has only filed lawsuits against people using software-based peer-to-peer networks like Kazaa and Fast Trac, which are considered rudimentary by seasoned file sharers.

"People who are actually deliberately file sharing, use bit torrent," he said. "The sophisticated file sharers haven't been using [Kazaa and Fast Trac] for years now."

Paying for P2P?

Currently, not all peer-to-peer networks found on the Internet are free; some charge a nominal fee — as much as a few pennies to a fraction of one — for each file downloaded. But don't be fooled; these sites are still illegal, according to Chidekel.

The pay-per-song peer-sharing model, while currently illegal, may pave the way for a future business plan.

"Some [peer-to-peer] clients of ours now are reaching out now to get licenses from record labels," Chidekel said. "There's a lot of people trying to find a way to monetize peer-to-peer network."

For now, consumers have the typical choices to buy digital music. In addition to iTunes, Rhapsody and Napster, more traditional retailers like Wal-Mart and Amazon.com are entering the fray. Some of these sites offer alternative pricing models. Emusic.com, for instance, offers a set amount of songs for a monthly membership fee.

Spiralfrog.com, one of the newer entries, offers songs for free if users agree to watch an ad.

These updated options have lured some former file sharers, like Josh Mogerman, a 36-year-old Chicago-based Web editor, away from peer-to-peer networks. But Mogerman ultimately blames the record labels for the ensuing mess.

"I've moved away from file sharing now that there are some realistic ways to get legal digital files. This whole situation is the music industry's fault. They kept their heads in the sand and ignored the needs of their customers, while also selling products at an inflated price. So, music consumers found options that suited their lifestyle and needs with things like Napster and Bear Share," Mogerman said. "Since it took the major labels so long to create a suitable alternative, they managed to undercut their own industry by helping to instill a belief in their core audience that maybe music really should be free."