The legality (or illegality, as it may be) of file-sharing is still up in the air. While it appears that uploading, or sending files out to others, is the only thing that's definitely illegal under current law, many downloaders have been sued or threatened by copyright holders, as have many producers of file-sharing technology. (A person's status as an "uploader" or a "downloader" is made murky by the way most P2P programs automatically make anything you've downloaded available for upload.) Most of those who have been sued have settled rather than take their cases to court. To be honest, I don't really give a damn about the legal context of file-sharing beyond its circumvention. As far as I can tell, the legal avenue that big media corporations are pursuing is just another tactic to delay dealing with the enormous market problem that they know is waiting for them.

The ethics of file-sharing are another story.

(For the purposes of this discussion I am using the definition of "ethics" found at dictionary.com.)

Is file-sharing ethical? Conditionally, yes, I think it is. There are several reasons for this conclusion.

Firstly, unauthorized downloading is not stealing. Opponents of file-sharing like to huff and puff at this contention, but there is a very good reason that no copyright infringer is charged with theft for his or her actions -- it's not theft. If I break into Lars Ulrich's house and steal his personal copy of ...And Justice For All, that is theft. Lars no longer possesses that record, and his choices are to get a court to arrest me and compel its return, buy a new copy or do without it. Similarly, if I swipe a copy of the record off of Metallica's merch table, that is a piece of physical property that they are no longer able to sell. They are adversely affected financially.

This is not the case if I copy my friend's AJFA CD or download the album in MP3 format from Bearshare. Metallica still has all their property and they still have all their money (less that spent on suing Napster). These actions fail to meet the criteria for theft.

They do, however, appear to rise to the standard of copyright infringement. The question for legislators and ethicists is where the fair use line falls. Our copyright laws are largely designed to thwart true intellectual property pirates -- the people selling bootleg DVD's everywhere from Grand Central Station to Nassau's Straw Market in the Bahamas. These people are profiting from the sale of others' intellectual property and taking actual sales from the legitimate IP owners. This is clearly not fair use.

However, Big Media has translated this model to file-sharing wholesale, concluding that every download is a "lost sale" and thus, equivalent to theft. It is self-evident, however, that this is not the case. When the price for something approaches zero, which is effectively the case for broadband P2P users downloading music and movies, people will try it for no reason other than that they can. This does not mean that they have any interest in paying, say, $18 for the CD. Even if they listen to it and like it, they may not have any interest in listening to it again, and thus not buy it. (You may recognize this model from your local library.) However, I'm now much more likely to pay to see the band in concert, or buy their back catalog, or their next album, or their t-shirt, etc. Indeed, I got into some of my favorite bands this way and have bought hundreds more CD's after file-sharing than I did before.

"Lost sales" remains Big Media's mantra, though, and to prop it up they produced a study that showed CD sales were down 9% in 2002. Subsequent analysis showed that, if you controlled for the state of the economy, there was no significant change. The recession caused the downturn in spending of disposable income, not Napster. But Big Media continued with their disingenuous claims, comparing file-sharers to terrorists and getting Orrin Hatch to personally take up the cause (Hatch is a songwriter and, it's safe to say, a very hot commodity on the P2P networks).

Surprisingly, very few people in the Big Media cabal had any problem with selling single tracks for 99¢ via iTunes, even though people who buy that one hit single are a lot less likely to go buy the whole album's worth of filler afterwards. Hello, lost sales!

Perhaps the most compelling reason to consider file-sharing ethical is that Big Media themselves have taken the stand that it is not, while making dubious claims about its impact, creating and advocating an adversarial relationship with some of their best consumers and fighting the idea of fair use at every turn. Ever since the introduction of the Betamax, those many moons ago, Big Media has feared turning over any control to the audience. "They won't watch our commercials! And they'll make copies of our shows!" A couple years later, beaten by the courts and fearing the future, they were shown the way when Wayne Huizenga invented mass video rental. Suddenly Hollywood loved the VCR. Ditto the portable MP3 player.

When they're not busy trying to destroy the technologies that will eventually make them an assload of money, Big Media lawyers spend a lot of time lobbying Congress to extend copyright further and further into the future. Way back when, copyright lasted 20 years. Until recently it was 75. Now it's 95, and you can bet it'll be extended again before 2023 -- that's when "Steamboat Willie" is due to enter the public domain.

File-sharing allows media consumers to more readily control what they consume and how they consume it. Because of this, it is inherently threatening to Big Media. As the theory of the Long Tail tells us, the Internet allows "mainstream" consumers to see how they differ from the mainstream and to easily follow up on those differences. The companies represented by the MPAA and the RIAA are going to lose eyeballs because of the Internet and file-sharing; there is no question about it. We can already see this happening. "The Blair Witch Project" was in many ways Internet-driven. The success of bands such as the Arcade Fire and Interpol can be attributed in large part to the advertising potential of file-sharing. When people are free to make choices outside the structure presented to them by Big Media's TV and magazines, they will not choose based on whether or not their money goes to a Big Media member, they will choose based on whether or not they like what they have to choose from. The democratizing power of the Internet, for good or ill, is too strong for Big Media to simply overpower. Instead of looking like the last people to give up on the geocentric universe, Big Media should be focusing on producing on the best content they can and providing open distribution channels. In may already be too late in some respects (I suspect that the music industry is never going to operate the way it once did, because too many people have spent too long with access to too much free music to be interested in any other music market paradigm) but there is still room to manuever. In my next post, probably the last of this series, I'll try to figure out where that room is.