Research paper finds music piracy ‘benefits’ album sales

By Stephen C. Webster - RAW Story
Friday, May 18, 2012

 

Illegally downloading pre-release leaks of major artists’ albums actually “benefits” first week sales, and if used properly these types of leaks could even work as an effective promotional tool for the largest record labels going forward, according to findings in the first draft of a working paper put out this month by an assistant professor at North Carolina State University.

However, the study (PDF) is not necessarily the godsent revelation advocates of file sharing and copyright reform may have been hoping for. Speaking to Raw Story on Friday, Asst. Prof. Robert Hammond, a Ph.D. graduate of Vanderbilt, cautioned that his results should not be construed to contradict the economic analyses put forward by music industry lobbyists in discussions with lawmakers.

Nevertheless, his study does pack a punch: “The findings suggest that file sharing of an album benefits it’s sales. I don’t find any evidence of a negative effect [from piracy] in any specification, using any instrument,” he wrote.

In fact, his study found that effect goes in the opposite direction: Hammond noted that the sales-boosting effect of piracy was most pronounced in cases where a major band’s album had been leaked online ahead of the official release. However, the overall amplification effect was relatively small, producing about 60 additional purchases in cases where an album was leaked to pirates up to 30 days before its official release.

“My results suggest that it’s possible to think of leaks as promotional activity, but more work needs to be done to understand how general that result is,” he told Raw Story.

He also noted that download data he used came from a “very small” BitTorrent tracker, and that the sales boosting effects could be more pronounced if data from some of the larger trackers were examined. Despite the size of his download tracker, Hammond told Raw Story that it actually offered him more detailed data than any other prior studies on the subject, revealing a previously unidentified correlation between downloads and sales.

Cross referencing that download data with music industry sales figures, Hammond was able to pinpoint key similarities. Namely, major bands are always downloaded the most, and they almost always see the biggest sales. Hammond found that these artists also saw the greatest benefit from pre-release file sharing. While that benefit may be relatively small, the popularity trend carried over to the genre level, with with pop albums seeing the greatest benefit, whereas independent artists or newly released groups saw none.

But that’s where the good news for copyright reform advocates ends: “What I find are individual downloads of an individual album are not harmful to individual sales,” he said. “That does not imply that if we aggregate all the downloading and all the sales, that more downloading, for the industry, means more sales for the industry.”

Hammond continued: “So much of the [recent] failed [Internet] legislation was driven by lobbying activities at the industry level. Nothing in my paper says those lobbyists and those industry level organizations are wrong in their claims. There has certainly been a steep drop in profitability in that industry. My results are on a very different question and so my ability to inform policy in that regard is somewhat limited.”

That steep drop-off in profitability remains a prescient reality for record companies even despite the emergence of online services like iTunes and Spotify, which have seen subscription numbers soar in recent years. Even in countries like France, where U.S.-supported Internet restrictions have significantly cut down on piracy, the music industry’s profits have continued to shrink year to year.

Explaining that the “appropriate” role of copyright is not a topic he’d care to address, Hammond added that his study simply does not address the “industry-level question” of the potential for harm posed by piracy.

Some of those industry analyses, however, seem to inflate the overall damages of piracy by attributing direct losses per download, as if to assume that the downloader would have otherwise purchased the item that is being shared with them. Rob Reid, creator of the online music service Rhapsody, explained in March during a speech to TED Talks why this is actually rather absurd.

“These days, an iPod classic can hold 40,000 songs… Which is to say, eight billion dollars worth of stolen media, or about 75,000 jobs,” Reid said. “Now you might find copyright math strange, but that’s because it’s a field that’s best left to experts.”

“So, putting my work in that context says that what’s good for an individual artist seems to be very different than what’s good for the industry,” Hammond concluded. “I imagine policy makers are more concerned with the industry than the individual artists.”

Copyright enforcement and the Internet: we just haven't tried hard enough?

By Timothy B. Lee - Ars Technica

On Tuesday, Mother Jones blogger Kevin Drum suggested that we don't have effective copyright enforcement on the Internet because we just haven't tried hard enough:

Something that's good enough to provide a measure of IP protection that works for the vast majority of non-supermen and isn't too unwieldy. Is that really any more unlikely than the invention of the internet itself? I'm not sure why. 

This is not something you want to believe if, ideologically, you're opposed to IP protection because you think that digital content is fundamentally different from meatspace content on the grounds that making a digital copy of something doesn't reduce anyone else's ability to use their copy. But neither does copying a book. That's never been the point of IP law. It's always been about the income stream an author can get from selling copies of his or her work, and that's exactly the same in the digital world as it is in the physical world. The arguments in favor of IP protection are much the same in both domains.

You might not want to hear that, but just because you don't want to hear it doesn't mean it's not true. The truth is that IP protection in the digital world might very well be possible. We won't know until we try, making a whole lot of mistakes along the way. If you want to argue that IP protection is a bad idea, then fine. Make the argument. But don't pretend that your preferences are also technological certitudes. They aren't.

The phrase that jumped out at me was "we won't know until we try." Among people who don't pay close attention to technology issues, there seems to be a widespread impression that the copyright debate pits those who think we should enforce copyright against those who are ideologically opposed to copyright protection. But the reality is that we've been "trying" to crack down on illicit file sharing for at least two decades, granting copyright holders stronger and stronger enforcement powers and devoting more and more taxpayer dollars to the effort.

This might not be obvious to those who only write about these issues on occasion. So in the interest of a better-informed debate, here's a partial list of significant US anti-piracy efforts made over the last couple of decades:

• 1992: Congress passed the Audio Home Recording Act, which mandated that digital audio devices have copy protection baked into them, and it also imposed a tax on blank media to offset harms from digital piracy.

• 1997: Congress passed the No Electronic Theft (NET) Act, which jacked up statutory damages for copyright infringement.

• 1997: The recording industry tried to sue the first MP3 players out of existence. Fortunately, courts argued that "space shifting" is a fair use. (This was a sequel to Hollywood's effort to have the VCR declared illegal on copyright grounds in the early 1980s.)

• 1998: Congress passed the Digital Millennium Copyright Act (DMCA), which effectively gave Hollywood the power to control the design of entertainment devices; all that was needed was to link new technologies with particular DRM schemes. Manufacturers couldn't crack the DRM, thanks to the new law, so they had to take out a license for its use, complete with a whole set of unrelated conditions. This is why, for example, most DVD players will refuse to fast-forward through commercials in a DVD if the publisher sets the "don't allow fast-forwarding" flag. Hollywood has used its rights under the DMCA to create a licensing regime for DVD players that allows it to micro-manage the design of DVD players, and consumer electronics firms that try to create a DVD player without Hollywood's permission are subject to civil and criminal penalties.

• 2000: The recording industry forced My.MP3.com out of business. My.MP3.com was one of the first "cloud music" services. It wasn't a file-sharing site. Rather, it allowed users to listen to their own music collections while on the road. The decision probably delayed the emergence of cloud music services like Google Music and Amazon Cloud Player by a decade.

• 2001: The recording industry successfully forced Napster out of business.

• Early 2000s: Under pressure from Hollywood, most states adopted laws criminalizing recording movies with camcorders.

• 2003: The recording industry began suing individual file-sharers, a process it continued for at least five years.

• 2004: Hollywood sued Kaleidescape for creating a "DVD jukebox" product that allowed users to rip DVDs and stream them to various devices around their household. That litigation is ongoing, and likely prevented the emergence of similar products.

• 2005: content companies shut down the file-sharing service Grokster and several of its competitors after a lengthy court battle.

• 2007: Hollywood sued MP3tunes, another cloud music site by the same guy who created My.MP3.com. The courts mostly sided with MP3tunes in 2011, but the case is ongoing.

• 2008: Congress passed the PRO-IP Act, which gives the government the power to seize US-based domain names after a one-sided ex parte legal process similar to the one used to seize the property of drug dealers. The PRO-IP Act also jacks up the penalties for other copyright offenses, and it created a new "IP Czar" position in the executive branch.

• 2010: The federal government began seizing domains of accused pirate sites using the powers granted by PRO-IP. The program has resulted in several dubious seizures and a couple of outright errors, though has also taken down sites like NinjaVideo in advance of prosecution and later guilty pleas from its principals. 

• 2011: The US government sought the extradition of a British college student for operating a "link site." Neither he nor his servers were located in the United States during the time he ran the site, and it's not clear if he violated British law.

• 2011: Under pressure from the Obama administration, major ISPs adopted a voluntary "graduated response" system in which they will soon play a more active role in enforcing copyright on their networks.

• 2012: The United States raided and shut down Megaupload, a file-hosting site that hosted a lot of infringing content and was one of the most heavily trafficked sites in the world. The principals of the site were arrested and at least their CEO has been denied bail.

This is a partial list, focusing on the most significant anti-piracy efforts undertaken in recent years. To be clear, my point isn't that all of these policies are bad. I think the case against Napster and Grokster was pretty strong (and said so at the time in the case of Grokster). The US version of the "graduated response" system seems fairly reasonable to me, and I haven't always found locker and link sites' legal arguments persuasive.

But the broader point is clear: every item on this list has imposed costs on third parties. Technologies with clear non-infringing uses have been pushed out of the market. Innocent parties have had their websites shut down. A woman was arrested for filming a birthday party that happened to occur in a movie theater. Angel investor Paul Graham has said he avoids funding music-related startups because the record labels are "effectively a rogue state with nuclear weapons." And most of these enforcement efforts costs taxpayer money.

Individually, none of these things might be worth getting upset over. But in the aggregate, they reflect a disproportionate focus on the interests of a handful of large companies. It's hard to think of a single example during this twenty-year period of copyright restrictions being repealed, relaxed, or any in any meaningful way liberalized. Reform proposals like the orphan works bill have languished.

Drum suggests that opposition to further increases in copyright enforcement comes from people who are "ideologically opposed to IP protection." But most of us are not anti-copyright; we just think enough is enough, and that the menu of enforcement tools Congress has already given to copyright holders is more than sufficient. We're tired of the constantly increasing copyright enforcement efforts because most of the costs of the "mistakes along the way" fall on innocent consumers, innovators, and taxpayers.

Supreme Court legalizes downloading music

Published: 04 October, 2011

The United State Supreme Court has refused an appeal that would have made downloading music an infringement of federal copyright law. Take that, Metallica!

The American Society of Composers, Authors and Publishers, or ASCAP, had been attempting to appeal to the Supreme Court an early ruling by an appeals court in New York that said that a downloaded song constituted a public performance of the song under federal copyright law. Attorneys for ASCAP were fighting to reverse that decision in hopes that they’d be able to collect additional royalties off of songs downloaded from the Web.

ASCAP had insisted that digital downloads were on par with public performances, which would thus allow copyright owners to receive compensation for each download. A federal judge and an appeals court had rejected that argument, however, and now the Supreme Court is also refusing to hear it.

According to the appeals court, “Music is neither recited, rendered, nor played when a recording (electronic or otherwise) is simply delivered to a potential listener.” US Solicitor General Donald Verrilli agreed with the appeals ruling and that just because a song was transferred over the Internet did not mean that it was being performed, reports Reuters.

Theodore Olson, a Bush administration-appointed solicitor general representing ASCAP in the matter believes otherwise. He argues that the earlier ruling placed the United States in violation of intellectual property treaties and other international agreements, says Reuters, but the Supreme Court said they wouldn’t bother to go over the appeal and issued no comment.

ASCAP, who has nearly 300,000 members, first lost the case back in September of 2010. In the last year, however, they have taken several routes in hopes of getting additional revenues for their clients that they say lose profits through digital downloads.

In the meantime, ASCAP members do indeed still receive revenue from downloads, just not the additional compensation that the group was hoping to get them. A mechanical royalty is offered to copyright owners through a separate body than that that handles performance royalties, which ASCAP was hoping to have applied to digital downloads.

Media futurist: Time to replace the Internet

'Contact' summit to study replacing DNS with peer-to-peer, democratic networks
By Nathan Diebenow
Friday, February 18th, 2011

How can the stranglehold on humanity's digital communications be broken? One media studies professor has a revolutionary idea.

"If we have a dream of how social media could restore peer-to-peer commerce, culture, and government, and if the current Internet is too tightly controlled [by the network owners] to allow for it, why not build the kind of network and mechanisms to realize it?” asked Douglas Rushkoff, writing for Mashable earlier this month.

Rushkoff is the author of Program or be Programmed: Ten Commands for a Digital Age and a noted Internet futurist. He also teaches media studies at The New School University in Manhattan.

To foster this emerging, peer-to-peer Internet, Rushkoff announced plans for a summit called “Contact” in October at the Angel Orensanz Center in New York City.

“From the development of a new non-hierarchical Internet to the implementation of alternative e-currencies, the prototyping of open source democracy to experiments in collective cultural expression, Contact will seek to initiate mechanisms that realize the true promise of the networking revolution,” he said.

Rushkoff told Raw Story last December that authorities already have the ability to quash cyber dissent. This is due to the Internet's original design as a top-down, authoritarian device with a centralized indexing system.

Rushkoff concluded that the Internet in its current form is simply unredeemable. From the near expulsion of WikiLeaks to Egypt's Internet blackout, it became clear to him that a fundamental change must be made.

As evidenced by the troubles dealt to secrets outlet WikiLeaks, essentially all one needs to do to halt a website is delete its address from the domain name system registry. A peer-to-peer Internet would use individual computers to route traffic to sites, as opposed to one centralized server, making it more resistant to censorship.

"This is not rocket science," Rushkoff quipped.

“A p2p network protected only by laws -- that exists but for the grace of those in charge -- is not a p2p network,” he wrote. “It is a hierarchical network allowing itself to be used in a p2p fashion, when convenient to those currently in charge.”

Rushkoff previously theorized that the new system might operate like FidoNet, a pre-Internet network that relied on personal computers acting as their own servers connected by modems via telephones.

“25 years of networking later, lessons learned, and battles fought; can you imagine how much better we could do?” he asked. “So let's get on it.”

P2P plaintiffs to get just 28 Time Warner IPs each month

By Nate Anderson | July 10, 2010 | Ars Technica

Suing tens of thousands of accused peer-to-peer movie file-swappers—it can be a lucrative business model, but it works well only when Internet service providers can turn huge lists of IP addresses into real names and addresses in a timely fashion. But what if a major ISP like Time Warner Cable only had to do 28 of these lookups a month? And might take three years to burn through its entire list?

Time Warner Cable has pleaded with the federal judge overseeing several of the P2P cases brought this year by the US Copyright Group. The company averages 567 IP lookup requests per month, nearly all of them coming from law enforcement. These lookup requests involve everything from suicide threats to child abduction to terrorist activity, and the company says that such cases take "immediate priority." It says that, without a major staffing increase, it simply cannot turn around more than 1,000 requests in a timely fashion without compromising the much more important requests from law enforcement.

TWC requested that the judge limit subpoena lookups for the US Copyright Group to 28 per month. In response, lawyer Tom Dunlap blasted TWC as a "good ISP for copyright infringers." He went on to threaten the company, saying, "To the extent TWC’s tactics are just that—letting the public know that TWC is a good ISP for copyright infringers because TWC will fight any subpoenas related to infringers’ activities—TWC exposes itself to a claim for contributory copyright infringement."

Judge Rosemary Collyer, who is overseeing the Far Cry and The Steam Experiment cases, doesn't agree. In a recent ruling, she has modified TWC's subpoenas so that the company "shall provide identifying information for a minimum of 28 IP addresses per month." And that's not 28 per month, per case; it's 28 per month total for both cases combined.

How long will it take to get through all these subpoenas? Several months ago, TWC faced 809 lookup requests related to the Far Cry case alone. Since that time, the plaintiffs have added several thousand more IP addresses to the case, and more requests have come from the Steam Experiment case.

Assuming a lowball estimate of 1,000 IP addresses that belong to TWC, the company may take nearly three years to do all of its lookups.

Collyer's ruling doesn't affect the other P2P cases brought by US Copyright Group that are being heard by other judges, and it doesn't affect other ISPs (TWC was the only one to object so strongly). But it does suggest that federal judges are sympathetic to the argument that law firms can't simply dump thousands upon thousands of IP addresses on ISPs and demand quick responses.

In addition, Judge Collyer refused to "sever" the thousands of defendants in each case, as requested by the EFF and ACLU. "But they may be severed in the future," she wrote.

Feds force colleges to police student file-sharing

New rules bring online piracy fight to US campuses--Colleges become reluctant allies in fighting online music, movie piracy under new rules
By Raw Story
Friday, July 2nd, 2010

Starting this month, colleges and universities that don't do enough to combat the illegal swapping of "Avatar" or Lady Gaga over their computer networks put themselves at risk of losing federal funding.

A provision of the Higher Education Opportunity Act of 2008 is making schools a reluctant ally in the entertainment industry's campaign to stamp out unauthorized distribution of copyrighted music, movies and TV shows.

Colleges and universities must put in place plans "to effectively combat the unauthorized distribution of copyrighted material by users of the institution's network" without hampering legitimate educational and research use, according to regulations that went into effect Thursday.

That means goodbye to peer-to-peer file-sharing on a few campuses — with exceptions for gamers or open-source software junkies — gentle warnings on others and extensive education programs everywhere else.

Despite initial angst about invading students' privacy and doing the entertainment industry's dirty work, college and university officials are largely satisfied with regulations that call for steps many of them put in place years ago.

But whether the investment of time and money will make a dent in digital piracy is uncertain.

"If the university is going to prohibit underage drinking, I think it ought to prohibit anything on the Internet that's illegal, too," said Alicia Richardson, an Illinois State University junior who applauds her school's restrictive policies on file-sharing. "I'm not going to mess with it. I know the consequences."

Among other things, schools must educate their campus communities on the issue and offer legal alternatives to downloading "to the extent practicable."

Colleges and universities that don't comply risk losing their eligibility for federal student aid.

Many colleges worried they would be asked to monitor or block content. But the provision says schools can get a great deal of flexibility, as long as they use at least one "technology-based deterrent."

Their options include taking steps to limit how much bandwidth can be consumed by peer-to-peer networking, monitoring traffic, using a commercial product to reduce or block illegal file sharing or "vigorously" responding to copyright infringement notices from copyright holders.

Almost all campuses already manage bandwidth or vigorously process infringement, or "takedown," notices, said Steven Worona, director of policy and networking programs for Educause, a higher education tech advocacy group.

While the recording industry has backed off its strategy of suing illegal file-sharers, it still sends infringement notices to colleges — a shot across the bow that urges users to delete and disable computer access to unauthorized music to avoid legal action.

"The problem campuses have is that commercial network providers are not doing anything to limit the amount of infringement on their networks or educate their customers about copyright law," Worona said. "Every fall, a new cadre of students arrives on campuses who have been engaging in infringing activity since the third grade."

Since October 2008, the Recording Industry Association of America said it has sent 1.8 million infringement notices to commercial internet service providers — and 269,609 to colleges and universities.

RIAA, which represents the major music labels, stressed that the numbers don't necessarily reflect piracy trends, but rather the group's ability to detect it.

College officials argue notices are a flawed measure of illegal activity because it's up to copyright holders whether to send them and that false positives are possible.

RIAA president Cary Sherman said the group can't say whether campus programs are putting a dent in piracy. But he said the threat of a gradually tougher response to repeat violations is working, pointing to the University of California, Los Angeles, as one example.

"We think we're beginning to get to a scale now where it actually can make a difference," he said.

UCLA has developed a system that notifies users by e-mail when the school receives a copyright infringement notice, setting into motion a process that includes a "quarantine" on the computer's Internet access and the student's attendance at an educational workshop. Repeat offenders typically face one-semester suspensions.

Since the workshops started, repeat offenders have virtually disappeared, said Kenn Heller, assistant dean of students. Earlier this year, UCLA also struck a partnership with Clicker Media Inc. to make both university-produced videos and network TV shows, music videos and movies available through its undergraduate student Internet portal.

The Motion Picture Association of America, which also pressed for the legislation, is encouraged by what campuses are doing but it's too early to tell whether it will curb piracy, spokeswoman Elizabeth Kaltman said.

Few campuses have gone as far as Illinois State, which raised eyebrows by seeking and accepting entertainment industry money to underwrite a now-abandoned research project on digital piracy.

The university also blocked all peer-to-peer activity in residence halls and on wireless access points, said Mark Walbert, Illinois State's chief technology officer. Students who use the technology for legal means — like tapping open-source software Linux or downloading World of Warcraft game updates — can get exceptions.

For students seeking legal download options, the school developed BirdTrax, a Web page with links to the free movie and music streaming websites such as Hulu and Pandora.

In 2007, the University of Michigan took a different approach, launching a campus initiative called "BAYU," which stands for "Be Aware You're Uploading." At little cost, the school developed a software program that automatically notifies users of university networks when they are uploading, or sharing files from their computer with users elsewhere.

The university does not look at what is being shared, and notices go out regardless of whether the activity is legal or illegal, said Jack Bernard, a university lawyer who devised the program, which Michigan offers free to other schools.

As a result, the number of copyright infringement notices the university receives has slowed to a trickle, he said.

"We think scare tactics and most technological means don't realize the ends we want because technological means never seem to keep up with people's ability to thwart them," Bernard said.

New technologies have made it more difficult to assess how much enforcement has affected piracy, said Joe Fleischer, chief marketing officer for tracking firm BigChampagne Media Measurement.

File-hosting services such as RapidShare store infringing content on distant servers, meaning uploaders' identities are difficult to track. Websites that share links to those files are searchable through Google.

"It's a much more complicated battle than it was five years ago because so many new modes of infringement are emerging," Fleischer said.

Judge "rejected all of the EFF's arguments" on P2P cases

By Nate Anderson | Ars Technica

Can a law firm sue up to 5,000 accused P2P users from across the US at once, and in a single DC court? For now, at least, it can.

In a 45-minute hearing yesterday before federal judge Rosemary Collyer of the Washington, DC District Court, lawyers from the ACLU, EFF, and Time Warner Cable squared off with Thomas Dunlap of Dunlap, Grubb, & Weaver, the firm behind the "US Copyright Group." 

US Copyright Group has spent the last year partnering with indie film producers like German video game auteur Uwe Boll and the producers of The Hurt Locker, offering to go after P2P downloaders of their films. Those who settle for $1,500-$2,500 can avoid a threatened court case that would seek $150,000 in damages.

But the EFF and ACLU argued that it just wasn't proper to sue thousands of people this way, because the people have no real connection to one another (a question of "joinder"). They also complained about suing people from Hawaii in a DC court (an issue of "jurisdiction"). And Time Warner Cable objected that it couldn't possible process thousands of IP lookup requests in a timely manner (an issue of "burden").

Judge Collyer was "very thoughtful about the issue" said EFF attorney Corynne McSherry when I spoke to her yesterday after the hearing. Collyer considered the concerns of everyone involved and eventually decided on a "creative solution," in McSherry's words: ISP subscribers will soon receive an additional notification letter agreed to by all parties. The letter will better explain their rights and the grounds on which they or their lawyers can object to the subpoena.

McSherry admitted that there were "other things we would have preferred to happen"—EFF and ACLU had asked the joined cases to be "severed" and each one filed individually, while Time Warner wanted the whole subpoena limited to 28 requests a month or else be quashed altogether.

While Collyer's order won't put an end to the subpoenas in process, it will call a halt to subscriber notifications in two of the main cases until all parties can agree on the notice text. Tom Dunlap tells Ars, "Until the court has approved the notice, in the two cases before Judge Collyer, the ISPs will not send notices to their subscribers." (The other cases are being heard before different judges in the same court.)

And Dunlap argued that the ruling was a basic validation of his firm's P2P litigation. "I would note the court rejected all of the EFF's arguments, including the request to sever any defendant at this stage in the case," he told Ars.

Those targeted by the lawsuits are still free to make their own arguments to the judge about issues like jurisdiction, but the litigation campaign is currently free to proceed.

File-Sharers are Among Industry's Biggest Paying Customers

File-sharers are content industry's "largest customers"
By Nate Anderson |

Drawing on a major study of Dutch file-sharers, Prof. Nico van Eijk of the University of Amsterdam concludes, "These figures show that there is no sharp divide between file sharers and others in their buying behaviour. On the contrary, when it comes to attending concerts, and expenses on DVDs and games, file sharers are the industry's largest customers... There does not appear to be a clear relationship between the decline in sales and file sharing."

In fact, the study found that file-sharers often buy more content, especially when it comes to films and games.

Differences in purchasing behavior between file sharers and non-file sharers

	Music	Films	Games
Buyers in the past 12 months: yes/no	No difference	No difference	File sharers buy more often (61% vs. 57%)
If a buyer in previous 12 months: number	No difference	File sharers by more (12 vs. 8 films)	File sharers buy more (4.2 vs. 2.7 games)
Related products	File sharers visit concerts more often and buy more merchandise	No difference in cinema visits	No difference in buying merchandise

Source: Communications & Strategies

Van Eijk's conclusions appear in a recent paper for the journal Communications & Strategies (PDF), one coauthored with Joost Poort and Paul Rutten. While van Eijk doesn't deny that specific industries (like recorded music) have been in decline, he paints a more complicated picture of the content industries as a whole.

For instance, Sweden has long been regarded as a worldwide piracy hub—it's home to The Pirate Bay, the VPN IPRedator, and it sent a member of the Pirate Party to the European Parliament. But van Eijk draws on 2009 research showing that "total revenues [in Sweden] from recorded music, live concerts and collecting societies remained roughly stable between 2000 and 2008."

That doesn't help the recording industry, however, unless music labels get a cut of revenues from live music and merchandise. That's exactly what has started to happen via so-called "360 deals" over the last few years, where labels will invest in recording and promotion budgets for bands, but only when they benefit from all parts of the band's revenue stream.

Van Eijk sees this as a necessary business model change in response to file-sharing, but he argues that far more innovation is needed. And he blasts the music industry in particular for acting out of fear. Labels tried to "stem the tide of unlicensed music file sharing with their conservative strategy of abstaining from innovation, promoting legal measures against supposed offences, and digital rights management," he wrote.

"This strategy resulted in the current backlash, providing space for a new entrant establishing a major brand in the online music business: Apple's iTunes. Reinvention of the business model looks like the only way out for the traditional players in the music industry."

If you attend music industry conferences, you never have wait long for someone to say that we have entered an age in which people are unwilling to pay for content; that is, traditional business models are dead.

Van Eijk still sees life left in direct content sales, but he notes that current prices are far out of line with consumer expectations. When file-sharers were surveyed about what a "reasonable" price would be for an album, a movie, and a video game, the answers were surprising. A full 75 percent of file-sharers thought €8 was appropriate for an album—not too far off from current pricing.

Darknets...

..and the future of P2P investigators
By Nate Anderson

Darknets are going mainstream, something that could make it more difficult than ever for rights-holders hoping to monitor public P2P networks in order to pick off offenders. That process, already difficult enough, could get a lot harder as such tools migrate out from the geekerati.

Darknet, with a twist of lime

Most P2P networks are open to any client, and it's a trivial matter to find and download content—indeed, this ease of use is the main point. In doing so, the IP addresses of the peers serving the files are revealed. When the content those peers serve infringes copyright, the IP addresses make it possible for rights-holders to file lawsuits.

In darknets, there is no public entry point to the network, making it difficult or impossible to know what's being shared. The very term "darknet" makes the whole process sound mysterious and quite possibly illegal, but such a darknet can just as easily be used by a family to share photos and video content.

LimeWire makes this easy. Users can share any file or class of files with only certain buddies. The files are kept updated on all machines, and newly shared files automatically show up on the other machines in the network. It's simple to do this using other services like Dropbox, which allows for group shares. Direct download services like RapidShare have also become popular ways to distribute even gigantic files without putting them on public P2P networks.

But LimeWire already has millions and millions of users, and is one of the most popular P2P clients. It's not yet clear how many casual users would want to use the system to share copyrighted material; hot new releases will require access to public P2P searches unless one happens to be friends with a music business insider. There is also no facility for adding public P2P users as buddies, meaning that you need to know them first.

For college students, though, such a system could make it easy to browse the music collections of everyone on one's floor, even with limited technical skills or familiarity with current darknet systems. Certainly, the new feature is likely to be seen in that light by the music industry, which is already suing LimeWire.

Darknets have been on the increase for some time, but as they get ever simpler to use and deploy, they could make it more difficult for content industry investigators to gather data for use in court cases or for "graduated response" schemes with ISPs. Massive darknets can be infiltrated, but networks of 10 friends? 20 friends? An extended family? It will be nearly impossible to know what's being transferred there.

And if graduated response truly takes root around the globe, its biggest achievement might well have little to do with stopping copyright infringement and more to do with driving it deeper underground. Certainly, the simpler the tools become, the more likely is the possibility.