Ubiquity of File-Sharing Web Sites Sparks Copyright Controversy

Article excerpt

A recent string of lawsuits filed by the music recording industry over alleged copyright infringements is bound to set a precedent for information sharing on the Internet, experts say.

Copyright owners have been up in arms over Napster, a Web site that offers free downloadable software that links users to a networked community that allows them to swap songs that are encoded in the mp3 format.

Several recording artists claim they will lose revenue because Napster's millions of users are more likely to download free music than actually purchase it. Though statistics have not necessarily supported this notion yet, music copyright owners may have a legitimate reason for concern, Stan Liebowitz, professor of managerial economics, School of Management, University of Texas at Dallas.

At press time, Napster had announced that it had formed a strategic alliance with Bertelsmann's eCommerce Group.

Bertelsmann is the media company that owns BMG music. Napster officials claim they will still offer free downloadable music in some form, but the partnership was forged, in part, to establish a mutually beneficial solution for all involved parties, namely a solution that rewards the copyright owners.

Liebowitz told attendees at the Association For Enterprise Integration (AFEI) 21 st Century Commerce International Expo2000, in Albuquerque, N.M. that he expects Web sites that offer free copyright materials to eventually be shut down.

"This is one time where [copyright owners] actually are correct when they're crying wolf," said Liebowitz.

"Napster really will do serious damage to the copyright owners. And the reason is there is no good way, as long as we allow the copying to occur without any prohibition and any payment, for the producers to capture the value of the copying," he said.

This is different than copyright worries and complaints of the past, Liebowitz claimed, such as the ramifications of the photocopying machine and the video cassette recorder (VCR).

"Copyright owners are always afraid of any new technology that has the capability of weakening their ability to appropriate revenues from the users," said Liebowitz. "And certainly, photocopying had that possibility."

But photocopiers have not caused many copyright owners to lose revenue, Liebowitz asserted, because they have found ways to generate profit-even from unauthorized copiers. There was not much of a threat to the book industry, said Liebowitz, because people generally do not photocopy books. Journal publishers faced a different dilemma, because people could go into libraries and photocopy information at no cost.

The solution the journal publishers came up with was to charge significantly higher prices to libraries for original copies of the journals. …