On 17 April 2009, four men were sentenced to a year in prison and ordered to pay fines to the sum of $905,000 each for the crime of piracy on the stormy seas of the Internet. This group, of course, are the infamous collaborators behind The Pirate Bay, a website dedicated to indexing music, movies, television programs, software and books that are being shared by users of BitTorrent all over the world. The same men are also the founding members of the first political party dedicated to copyright reform, aptly titled The Pirate Party.
At first glance the case against The Pirate Bay seems quite cut and dry, a group of people profiting from providing links to downloadable copyrighted material at no charge to the end user. Simply put, they made a business facilitating the sharing of media files. Some of these files are copyrighted and others are not. However, as the trial developed, it became clear that the issue of file sharing is not just a simple issue of piracy for profit. The case rapidly became a poster child both for big record labels struggling to survive in an increasingly digital world and artists struggling for independence from traditional distribution channels.
The case started badly for the prosecution when the initial charges of assisting copyright infringement were dropped due to the prosecution’s lack of understanding of BitTorrent technology. The Pirate Bay does not actually host files but provides links to them; the hosting itself is done by citizens of the Internet who wish to share files with each other. The prosecution instead moved forward with the lesser charge of ‘assisting making available copyrighted material’.
While the entertainment industry is quite right to defend its property and its revenue stream, the question that is being increasingly asked by the public and by artists themselves is, ‘If the file sharing model is such a financial success for pirates, why isn’t the entertainment industry capitalising on it by setting up its own file sharing systems?’ Unfortunately, large media companies are so big that they are not really in a position to start supporting themselves using the Web 2.0 ‘give it away and claim ad revenue’ business model. Instead, they sell licence agreements to smaller companies that wish to do so.
While the big players announce profits often exceeding $15 billion and at the same time are filing lawsuits over the speculative millions they have lost, smaller record labels and independent film producers are building their fan bases and revenue streams by giving their content away to anyone who cares to listen. It has been suggested that file sharing increases the popularity of the media being shared and this has created a marketing opportunity for artists who would never have been able to compete if it wasn’t for the free publishing and marketing platforms that have been spawned by the Internet.
It is not only the little guy who sees these opportunities. In recent times popular recording artists and film makers have been struggling to cut their legal ties to mainstream media publishers in order to secure better distribution and revenue for themselves, as well as to protect the interests of their listeners and viewers.
The newly formed Featured Artists Coalition (FAC) is fighting back against the Recording Industry Association of America (RIAA) to put some power back into the hands of the artists themselves. FAC includes members such as Robbie Williams and Radiohead, who are concerned that artists are being exploited by record labels and no longer have any say in the music they themselves create.
Last year FAC members Travis encouraged fans to share one of their songs with their friends. One fan posted the track on his website which resulted in a takedown notice from the International Federation of the Phonographic Industry (IFPI). It should be noted in their favour that the IFPI did back down, but the incident demonstrated how artists have been losing control of their own creations and showed labels as being out of touch.
There is mounting concern among musicians that they are being exploited and lobbyists are helping to push through laws that only further this exploitation. For example the EU hopes to extend copyright on audio recordings from 50 to 95 years. This would give labels a hold over music until long after the original artist is dead. The FAC on the other hand would like to see this figure reduced to 35 years. There is clearly a conflict of interests here: artistic integrity versus profit margins.
Influential bands Radiohead and Nine Inch Nails have been the first of a growing number of popular musicians to break their contracts with their parent labels and take the bold step of distributing their music themselves. Both groups have reported great success with this and have even profited by giving their music away for free. Trent Reznor from Nine Inch Nails sees every person who downloads an album freely as somebody who will potentially pay for concert tickets, tee shirts and other merchandise. Radiohead focused on selling boxed sets of their music while giving MP3s away and asking for donations. Both are taking the risk of pioneering new business models and seem to be succeeding.
The turning point for both bands was the realisation that their music was being sold at prices generally unaffordable to their fans. On top of this they were only receiving a minuscule amount of the revenue and were forced to pay the record companies for the privilege of recording in their studios. Ed O’Brien from Radiohead has been quoted as saying of record contracts, ‘It’s like taking out a mortgage on a house, paying off the mortgage and you still don’t end up owning the house’. While Trent Reznor of NIN said: ‘One of the biggest wake-up calls of my career was when I saw a record contract. I said, “Wait - you sell it for $18.98 and I make 80 cents? And I have to pay you back the money you lent me to make it and then you own it?”’ Trent Reznor is currently developing a new Internet based music distribution platform and is actively encouraging artists to ditch their labels.
There is also a growing dissatisfaction with the practices of conventional MP3 distribution outlets such as iTunes. Benn Jordan, who makes a living composing scores for television, is also a recording artist. He released his recorded music on The Pirate Bay after finding one of his albums on sale on iTunes. He had not been notified of any agreements with iTunes and didn’t receive any remuneration for the music they had sold. Since then he has been focusing on developing his own record label. ‘My label,’ says Jordan, ‘doesn’t have a complex or radical plan. Our goal is to simply compensate our artists as much as possible, and that includes utilizing the ‘digital revolution’ to our advantage, instead of punishing our artists by punishing their fans’.
Over the coming years the digital world is sure to transform the way music is paid for and distributed. The uptake in file sharing is not likely to be slowed down by judgment on The Pirate Bay case. At the same time the big media companies will not back down from defending their revenue sources. It is also clear that the Internet has created a space for independents to promote themselves and generate revenue in a way that wasn’t possible before. What remains to be seen is how these digital movements will affect copyright law in the future.
The Pirate Bay case is by no means finished. The accused will file an appeal and the case is expected to move to the Swedish Supreme Court. Some commentators have speculated that the case could continue for years. Whatever the final outcome of the trial may be, the initial proceedings have created waves across the Internet and many questions have been raised about the future of copyright, media distribution and the business models which the media industry has used in the past and will use in the future.
Latest Update: As of 23 April, it has become clear that the Judge who sentenced the men behind The Pirate Bay is a member of the same copyright protection organisations as the main entertainment industry representatives in the case. At the time of writing this update the defendants were expected to file a request for a retrial.
The views expressed are the author’s own and do not necessarily represent the views of The Institute of Legal Secretaries and PAs.