Slyck Questions BPI

October 9, 2004

Michael Ingram

Phillips: The most important thing for us is to raise awareness here. We’re not anti p2p per-se, but we do have a problem with the hundreds of millions of files that are being illegally uploaded to the internet by p2p users for others to steal. We don’t expect everyone to understand what a record company does, but we need to protect the investment our members make in new music. That’s our priority.

As for the price of music, Phillips maintained that higher prices are the cost of living in the UK, not the fault of the BPI. He illustrated by pointing to higher transport costs, although he too is unhappy that the Paris Metro costs less than the London Underground. He did not comment specifically on consumer groups asking for an enquiry to discover if iTunes charging above the odds in the UK is against EU regulations.

Slyck: The BPI recently made a press release, which congratulated the music industry on putting out some high quality artists and making CDs better value for money. The net result was increased sales. BMG have also introduced cheaper CDs and all but admitted that lagging CD sales are a self inflicted problem

Mr. Steinkamp, head of BMG Germany said, “We must become customer friendly and offer music fans a broad choice. The music industry has sat motionless on its backside for far too long…. The cheap version [of the CDs] will be similar to a self-burned CD, with no cover and just the title printed directly on to the disk. That is our anti-pirate CD.”

Should the industry not continue to look inward, rather than lashing out at consumers who use file sharing networks?

Phillips: Don’t forget that the music industry is not a content delivery service. It is a business. Consumers are people who buy things, not people who steal things and then share them with millions of others. It is our role to continue creating music for people to buy; technology provides us with the opportunity to do that better than ever before, and the 30 legal sites show we are using it. What we seek to stop is people uploading files to the internet without permission. It’s illegal. We’ve put legal alternatives in place. We’ve warned repeatedly that we’ll sue if people don’t stop – but clearly that’s not been enough.

Slyck: Lawsuits have yet to see any success in America. IT Innovations and Concepts have reported a continuing rise in P2P traffic. File sharers have merely moved to other areas to share files, leaving only people who do not know any better to get sued.

Why would lawsuits in the UK be any more successful?

Phillips: You’re right that p2p traffic is up. But the number of infringing music files on p2p networks fell from 1 billion in June 2003 to 700 million in June 2004; while broadband penetration has been increasing. In other words, much of this increasing p2p traffic is porn, movies and god knows what else. What’s more, awareness of the illegality is a lot higher; 68% of UK consumers are now aware that unauthorized file-sharing is illegal. Given that the purpose of litigation was to a) raise awareness and b) reduce the number of files being uploaded, you’re wrong to say that lawsuits have not worked.

Philips denied that usage figures were taken directly from Kazaa Media Desktop, which are produced as an estimate, and only for the FastTrack network.

Slyck: Evidence from a complex and in depth study by California and Harvard Universities shows that file sharing does not affect CD sales. Although the BPI and CRIA have published counteracting evidence, few people would disagree the Harvard study was superior in quality. Would it not be prudent to wait and make sure that we are not running into a bloodier version of the UK Betamax equivalent, which saw the BPI attempt to ban the Amstrad tape-to-tape recorder, contending it would destroy the industry?

Phillips: Firstly the “Harvard Study”, as it’s become known, was so complex that the analysts misinterpreted what their own flawed analysis was telling them. Though widely reported, and held up by file-sharing apologists as “the truth”, this report was subsequently dismissed in its academic peer review, which concluded that the research “could at best be taken to be inconclusive”.

What is true, however, is that respected research outfits such as Forrester, TNS, Enders, Ipsos-Reid, Inform, Edison and Jupiter have all demonstrated that any promotional effects of illegal file-sharing are more than outweighed by the vast numbers of people that simply don’t buy music anymore.

The results of the peer review can be seen here

Despite the claims by Philips that suing is the right course of action, it is difficult to imagine a mass exodus from file sharing to paid services.

However, the BPI is unwilling to wait for online services to increase in popularity as they reap the rewards of the press coverage, and the content available improves in both quantity and quality.

RISK

If all files sharers were equally at risk, according to statistics from the BPI press release, the chance of getting caught is 0.0004%.

However, there also needs to be consideration that the only targets are Gnutella, Fasttrack and The WinMX Peer Network. If you are using any of these, you are running a fractionally higher risk.

However, not all file sharers on these networks are equal. Philips compares the chances of getting caught like those of getting fined for speeding. File sharing on any of the targeted networks is akin to traveling on the motorway, which has a 70mph speed limit. A commuter traveling at 80mph has a very low chance of being pulled over, if any. In comparison, the police would not hesitate to issue a fine to anyone caught traveling at 100mph.

Likewise, the BPI is targeting those who are offering a vast amount of copyright material for download. The less offered, the less chance of receiving a lawsuit, but there is no trigger point. When asked if 30 files could trigger a lawsuit, Philips compared the question to asking a policeman if driving at 80mph is acceptable, and so had to respond that it is not.

As a result of speed enforcement, speeding is minimized rather than eliminated. The BPI plans the same result. This is to stop users offering excessive amounts of material, rather than to stop file sharing completely.

To discover the number of infringing files being shared, it is highly likely that the industry will be using the built in search functions on the file sharing software, which can be used to browse through all the files a particular user is sharing.

However, the various Kazaa Lite clients do not allowing browsing of shared folders. Instead, users have to search for a specific term to find if a user has any files which match. To discover if a user is a “prolific sharer,” the industry would need to check the response of thousands of queries. This would be wasteful considering the ease of “find more” and catching those using Kazaa Media Desktop.

Those using WinMX do not have so much choice.

When questioned if this theory has any basis, Phillips simply replied, “You can’t hide.”

With an array of networks and tools, it is quite clear that educated file sharers can hide. It is likely that only a small level of protection is required, such as hiding the shared folder from general queries, or using IP blocking software. For more security, users can change networks. In the longer term, this may be to anonymising networks.

The large networks are cherry trees of uneducated users who are easy to target. Nothing more is required to attract media attention and scare file sharers.