Music Industry Targets Piracy By Europeans
By KEVIN J. DELANEY and CHARLES GOLDSMITH
Staff Reporters of THE WALL STREET JOURNAL
Emboldened by a belief that its U.S. crackdown against music pirates has slowed illegal downloading, the recording industry now plans to sue individual song swappers abroad.
Allen Dixon, general counsel of the London-based trade group International Federation of the Phonographic Industry, said "lawsuits will probably take place in 2004."
Many industry officials feel a crackdown in Europe is long overdue. Illegal file-sharing in Europe has, with less publicity than in the U.S., taken a big bite out of the world's second-largest music market, which accounted for $11 billion, or 34%, of global sales in 2002. In Germany during the first half of 2003, for example, pirated song downloads and copied compact discs equaled or exceeded the number of those purchased, according to data supplied by the IFPI. German music sales declined 18.1% during that period.
European-based industry officials have been impressed with the apparent results of litigation against individuals in the U.S. -- where annual sales last year declined by just 0.8% -- although they noted that big-selling hit albums also helped stem the declines of previous years.
The music-industry trade group is expected this week to issue new figures that show a decline in music sharing in the U.S. -- but an increase outside the country. "The experience with the U.S. has shown there are just some people who don't get the message until there are actually legal cases," says the IFPI's Mr. Dixon.
However, the industry's plans to sue individual swappers quickly and in large numbers was greatly limited last month. The U.S. Court of Appeals for the District of Columbia ruled that the industry had to appear before a judge to obtain subpoenas demanding that Internet service providers turn over names of customers believed to be swappers. Before, industry lawyers had been able to obtain subpoenas from court clerks simply by filling out a form. It is unclear how the ruling will affect the industry's crackdown abroad.
The slow arrival in Europe of legal downloading sites has created fertile conditions for continued piracy in the region. Apple Computer Inc.'s popular online iTunes Music Store, for example, isn't available yet for consumers in the region unless they have U.S.-issued credit cards. The IFPI says there are about 30 legal music download sites available in Europe, with a significant expansion expected in 2004.
Campaigns outside the legal sphere to convince consumers not to pirate music also are likely to expand outside the U.S. this year. The current U.S. campaign includes advertisements picturing rock stars like Sheryl Crow proclaiming, "I DOWNLOAD (Legally.)"
"Attitudes are changing" in Europe, says a spokeswoman for the British Phonographic Industry, or BPI. "People have seen the effect [of lawsuits] in the United States." Besides backing a tougher international crackdown against file-sharing, the BPI has gone to court against online sites. The target in those cases was Internet sales of cut-price CDs imported from outside the European Union, circumventing the usual distribution networks. A court case is slated to begin in London on Feb. 2.
Apart from some scattered offensives against file-sharing individuals, such as one in Denmark in 2002, the industry has notched few European wins in its campaign to enforce music copyrights. In Germany, the most significant action has been an April police raid on a man who allegedly operated a file-swapping service, but prosecutors haven't launched a criminal proceeding.
In fact, European courts have dealt the entertainment industry some high-profile setbacks in recent weeks. The Dutch Supreme Court ruled last month that the creators of online file-sharing service Kazaa couldn't be held liable for piracy. And a Norwegian court in December cleared a 20-year-old known as "DVD Jon," who had distributed software that could enable movie DVD copying. The U.S. film industry had brought the case. The defendant's lawyer hailed the decision as a boon for CD and DVD copying across Europe. U.S. courts last year had barred an American from distributing the Norwegian's program.
In October more Europeans used the Kazaa file-sharing software or visited the Kazaa Web site than Americans, according to research firm Nielsen/NetRatings, which estimates U.S. traffic to the site is down about 50% from its peak.
Not everyone thinks the battle has been won in the U.S., and some research suggests online music piracy is rising there again. According to a survey by NPD Group, the number of U.S. households downloading from such services climbed 6% in October and 7% in November, reversing a six-month decline.
Whatever the case, the IFPI's Mr. Dixon says that a spillover deterrent effect from the U.S. lawsuits has contributed to a decrease in the uploading of music files to Kazaa and other services using the same FastTrack file-sharing technology from abroad. At the same time, he estimates that non-U.S. residents are responsible for more than 10% of the music files available online for pirating, a greater proportion than before the industry began its U.S. legal push against users. That's due largely to growing use of rival, less-mainstream services rather than Kazaa and the others based on similar technology, Mr. Dixon says.
Some critics predict that the recording industry risks a backlash if it starts threatening individuals with lawsuits in Europe, particularly if its targets include minors, as they did in the U.S. "They would get even worse publicity in Europe because a lot of Europeans -- rightly or wrongly -- tend to resent what they see as U.S. cultural dominance," says Ian Brown, director of the Foundation for Information Policy Research, a nonprofit Internet policy think-tank in London. On the other hand, the music industry learned some lessons from its initial clumsy efforts in the U.S., and recent moves there have more effectively targeted specific large-scale file-sharers.
