Global Downloading, Local Lawsuits

Hauling U.S. file-sharers to court won't stop the flow of free tunes from overseas

It took a couple of nanoseconds for news of the U.S. music industry's legal assault on file-swappers to reverberate across the Atlantic -- and the reaction was shrill even by online standards. "World War III will be fought over the telephone lines," declared one young German on a Web forum devoted to "the war for digital freedom." Another young man warned darkly that he would learn to fly a plane and "behave like a terrorist," though he decided that first he would "go chug down a beer."

The Internet discourse, overblown and juvenile as it may be, demonstrates that illegal file-sharing isn't just a U.S. problem. Even if the Recording Industry Association of America makes good on its threat to sue thousands of people who are distributing pirated material in the U.S., it will hardly be able to choke off the supply of free tunes. "You can't stop this digital revolution," warns Kim Schmitz, a self-styled Internet entrepreneur and former hacker from Germany.

SCARE TACTICS. The RIAA'S strategy sounds reasonable. The theory is that 90% of the illegal content comes from a core of dedicated users of programs such as Kazaa, the file-sharing software made by Australia-based Sharman Networks. These people offer thousands of songs to anyone who wants to download them. If the RIAA can scare those hard-core sharers with its lawsuits, the thinking goes, users might turn to legal Web sites that charge real money for digital music. To some extent, it has been successful: Kazaa traffic, for instance, has plunged nearly 40% since June, according to researcher Nielsen/NetRatings, although many experts believe that drop-off will be temporary.

The Web, though, really is worldwide. Even if the record companies shut down Americans who provide free songs, downloaders can simply turn to overseas sources for their music. That's no problem, since users of programs such as Kazaa, Grokster, or BearShare have no way of telling whether the Motörhead or Britney Spears songs they're taking come from Frankfurt, Germany, or Frankfort, Kentucky. "A downloader is just a downloader," says Carl, a 21-year-old student in Australia. "You don't know if he or she is from a certain country."

Youth culture is as global as the Internet. That's especially true in Europe, where young people listen to many of the same bands as Americans, and a healthy 10% of homes have the high-speed Internet connections essential for illegal sharing. While file-swapping is not as epidemic in Europe as in the U.S. -- home to 60% of global file-sharers -- it's widespread and growing fast. About 6.4 million Germans over age 10 downloaded music last year, up 31% from the prior year. Last year, sales of recorded music in Germany fell 9%, according to the International Federation of the Phonographic Industry, a London-based trade group.

Sales have also begun to taper off in France, which until recently had defied the global decline in music sales. And while language and differences in taste have held back file-sharing in countries such as Japan and Korea, it's increasing quickly as the number of high-speed Net connections surges.

Going after file-sharers in court could be more complicated outside the U.S. American law makes it relatively easy for the recording industry to subpoena customer records from Internet service providers. But copyright protections differ from country to country, and stronger privacy laws -- especially in Europe -- might make it more difficult to identify illegal sharers. "When you get outside the U.S., you get into a legal minefield," says Rebecca Jennings, an analyst at Forrester Research Inc. in London.

Abroad, the record industry also worries about strong-arming customers, because the tangle of licensing issues means such buyers have fewer legal ways of getting music online than in the U.S. So until the industry can figure out how to deal with these tough problems internationally, it can block the front door for U.S. sharers, but plenty of tunes will come in through the worldwide window the Internet has created.

Corrections and Clarifications The illustration accompanying "Global downloading, local lawsuits" (European Business, Oct. 6) should have been credited to Richard Borge.

By Jack Ewing in Frankfurt and Heather Green in New York

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