File Sharing Down After Lawsuits

The major record companies’ legal assault on file sharing appears to be cooling the most popular networks for downloading unauthorized copies of songs, new research shows.

A study by Nielsen//NetRatings, a firm that measures audiences for Internet-based applications, found a 41% drop-off over the last three months in the audience for Kazaa, the leading file-sharing network. Many of the 261 file sharers sued by the major record labels Sept. 8 were Kazaa users.

Meanwhile, action in the courts and in Washington is heating up. A new lobbying group for file-sharing companies called on Congress on Monday to force the record companies to the bargaining table, and the Recording Industry Assn. of America announced that more than 925 people have signed legally binding agreements not to share or download music without permission.

The labels’ lawsuits accused file sharers of violating copyrights by offering an average of 1,000 songs for others to copy on Kazaa, Grokster and three other popular networks. The RIAA has said it plans to bring thousands of similar lawsuits in a long-term campaign against online piracy.

But critics say the RIAA would have to sue millions of people to be effective, given estimates that more than 60 million Americans use file-sharing networks. The 927 people who have pledged not to share files represent 0.0015% of the networks’ users.

Nevertheless, Nielsen//NetRatings found that Kazaa attracted 3.9 million users during the week ended Sept. 21, down 41% from the 6.5 million users during the week ended June 29. It also found that the audience on the Morpheus network dropped 4% during the same period, from 272,000 to 261,000.

“The RIAA is clearly sending a strong message to American Web users, and the message appears to be working,” said analyst Greg Bloom of Nielsen//NetRatings.

Other researchers also have reported drop-offs in file-sharing traffic after the RIAA announced plans to sue. But Nielsen//NetRatings is the first to measure traffic since college students, who are among the most active file sharers, returned to campus.

The RIAA reported that it has reached settlements with 54 of the 261 sued, and with 12 people who had been targeted for lawsuits that had not yet been filed. In addition to requiring the people to pay an undisclosed amount and destroy the songs copied without authorization, the settlements bar them from downloading or sharing songs without permission, or allowing their Internet accounts or computers to be used for piracy.

Under federal copyright law, the record labels would have been entitled to $750,000 or more if they won their cases at trial. But judging by the handful of settlements that have been publicized, the RIAA has been settling for about $3,000.

In addition, 863 people who had not been targeted for lawsuits formally agreed to destroy the copies they had made and refrain from unauthorized file sharing. The 863 participated in the RIAA’s controversial amnesty program, which calls for file sharers to renounce piracy in exchange for the RIAA promising not to assist in any lawsuits against them.

Also Monday, P2P United, a lobbying group formed by six companies that distribute file-sharing software, including Grokster Ltd., Lime Wire and StreamCast Networks Inc., called on Congress to end what Executive Director Adam Eisgrau called “discriminatory lawsuits that run roughshod over the public’s right to due process.”

In particular, P2P United wants lawmakers to change a 1998 law that gives copyright holders the power to subpoena Internet service providers to identify alleged infringers. The record companies have sent more than 1,500 subpoenas to Internet providers, demanding the names of people whose accounts allegedly were used to share significant amounts of music online.

The group also wants Congress to force the record companies to bargain with them. And if those efforts failed, they said, Congress should set the terms for legal file sharing.

Arguing that file sharing is unstoppable, Eisgrau said the question for the record companies was, “Do they want to be right and dead, or do they want to be flexible and creative and survive?”

The group issued a code of conduct Monday, calling for file sharers to be “prominently informed” that using the networks for piracy is strictly forbidden.