The music industry is beginning to understand that lawsuits don't deter pirates and that it must find ways to make money from P2P sharing, says Adam Webb of Guardian Unlimited
Looking forward to future business together ... " So concludes the cheerful, though some might say cynical, payment confirmation screen at P2Plawsuits.com, a website allowing American college students accused of uploading copyrighted music to peer-to-peer networks the opportunity to settle upfront and out of court. It's the latest initiative by the Recording Industry Association of America (RIAA) in its fight against online piracy.
The RIAA began legal actions against US citizens in June 2003, and its current strategy of targeting college campuses has created a wave of new headlines - most of them negative.
In all, 13 US universities have been pressured into supplying the details of students who have shared music over their computer networks.
Once revealed, those individuals will be offered a discounted settlement at P2Plawsuits. Failing that, they will be taken to court. But are these tactics likely to be imposed upon those who upload and share music in the UK? And are they having an impact on levels of P2P activity?
The British Phonographic Industry (BPI), has displayed a tad more sensitivity than its US counterparts, where more than 18,000 people have faced legal proceedings, including a recently deceased 83-year-old woman and, in one high-profile case, a 12-year-old girl.
"You have to give the BPI credit," says Struan Robertson, a technology lawyer with Pinsent Masons and editor of IT legal magazine Out-Law. "At the time that the RIAA started making noises about suing individuals, the BPI waited until the law was clear until and a legitimate [download business] was in place. I think they deserve credit for that."
Since launching legal proceedings against 28 filesharers in October 2004, the BPI says only 111 further actions have been instigated. Of this total, 127 were settled out of court, with the offending individuals paying an average of £2,300. The remaining cases all resulted in civil actions; the BPI won each one with either default or summary judgements.
The first of these cases, in January last year, resulted in a landmark legal ruling, with two men ordered to pay £5,000 and £1,500 respectively for copyright infringement. Additional costs and damages were estimated at up to £20,000.
However, although the court's opinion was unequivocal - that "ignorance" about the legality of filesharing is not a defence - the question of whether those lawsuits have begun to eradicate file sharing is less clearcut.
According to Eric Garland, chief executive of Big Champagne, a media analysis company that specialises in monitoring P2P traffic, around 1bn tracks are traded illegally each month.
These figures are dwarfed by estimates made by the International Federation of the Phonographic Industry (IFPI). It reckons that about 20bn tracks were illegally shared last year. And this despite the closure of many of the industry's P2P nemeses, such as the first, illegal Napster (against which some lawsuits are still outstanding), Grokster and Kazaa.
"In Europe there have been hundreds of [legal] actions, but the number of filesharers are in the tens of millions," says Mark Mulligan of Jupiter Research. "If you're a filesharer, you know that the likelihood of you being caught is very similar to that of being hit by an asteroid."
However, for the BPI's chief executive, Geoff Taylor, the primary motivation behind the legal action was never to stamp out filesharing, but to raise consciousness. "Our goals were to establish clearly that filesharing is illegal," he says.
"We never expected these actions to wipe out illegal filesharing on their own, but they've done much to raise awareness about the illegality of distributing music over the internet using P2P networks, and have been effective in changing many consumers' behaviour."
Taylor adds it is "likely" that legal actions will continue this year, although he would not say whether this would include downloaders as well as uploaders. So far only those who offer music have been sought, not those who grab a copy via download. The BPI will also be "developing new strands to our enforcement strategy that respond to developments in the nature of the Internet piracy threat".
That means bringing ISPs into the equation. The music industry is pressing ISPs to cut off people it identifies as filesharers. That has met with a distinctively cool reaction from ISPs, who do not see it as their job to do the BPI's enforcement.
Of greater concern to the BPI is the fact that filesharing networks have fragmented. Traditional P2P networks such as Limewire and Morpheus are still operational, but an increasing volume of song swapping now takes place via closed social networks or MP3 blogs. Q magazine recently listed URLs for more than 20 of the latter in a feature titled "100 Ways To Get Free Music!"
Additionally, explains Alex Rofman, vice-president of corporate and business development at SnoCap (a company set up by Napster founder Shawn Fanning to let artists monitor and profit from P2P sharing of their work), those behavioural traits synonymous with P2P - such as sharing, discovery and interaction - have now been appropriated and are the bedrock of a whole raft of Web 2.0 businesses, from MySpace and YouTube to Last.FM and Pandora.
"In the traditional sense, 'P2P' is what Napster was - a downloadable client, not a whole lot of bells and whistles, just an index of content that was available. Social networking has really captured that unique aspect of content sharing that consumers love and brought it to a whole other level of self-expression - you can write about stuff, you can put photos up, you can chat with friends and so on. Hundreds of millions of consumers have evolved their behaviour and are consuming media in a much different and more legitimate way when they used to."
The music industry is adapting to these evolving consumption models and signing content deals often based on a cut of advertising. It has to - the revenue hole from falling CD sales is not being plugged by iTunes downloads.
However, aside from encouraging consumers to, well, consume, such strategies will often mean partnering up with previously sworn enemies - such as Fanning, through SnoCap.
Elsewhere, yet-to-be-launched "legal" P2P networks (ie users will be able to swap DRM-encoded tracks) QTrax and Mashboxx have all signed deals with major labels. The former will run on the Gnutella network, while the latter is headed by former Grokster boss Wayne Rosso. BitTorrent, meanwhile, has recently launched a legal download service. Its software will also power the next wave of video platforms in the shape of the BBC's iPlayer. And then there is Joost, whose founders, Niklas Zennstrom and Janus Friis, developed the technology that powered Kazaa.
"Six years later, the labels have learned the difference between P2P and piracy," says Rosso. "They've learned that P2P is a technology. Ultimately, I think that the content will be free and all ad supported."
The killer question then, adds Paul Brindley, MD of digital music research consultancy MusicAlly, is whether any of these business models can fly, or will be allowed to fly. "For all the talk about legalised P2P services, the question remains: where are they?"