Oct. 7: Despite verdict, experts say paying for music is passé

DULUTH - The music industry may have won a symbolic battle with a Duluth jury's $222,000 judgment against Jammie Thomas of Brainerd, Minn., but it has lost the war against music piracy, according to industry analysts, copyright lawyers and information technology experts.

Online music piracy is rampant, as new file-sharing technology such as BitTorrent has replaced the Napster and Kazaa music-sharing services, forced by legal pressure to shut down and reinvent themselves. Bands such as Radiohead are selling their songs online for whatever people are willing to pay.

And the same industry that has sued 30,000 customers for illegal downloading is now experimenting with radical new ideas: selling some songs on iTunes and Amazon.com without copy protection or offering free music through SpiralFrog.com to people willing to watch ads.

Thursday's judgment in U.S. District Court against Thomas "is essentially a nonevent," said Gene Munster, a digital music industry analyst for Piper Jaffray in Minneapolis. "The war against illegal downloading has long been lost because 85 percent of all downloaded digital music is still illegal copies."

Besides, Munster added, a person's chances of getting caught pirating are less than their chances of being struck by lightning.

Legally downloaded music has grown rapidly to become 5 percent of the music industry's $30 billion in worldwide revenue, while sales of music CDs continue to drop sharply, Munster said.

Thomas, 30, who left the courthouse on Thursday without commenting, said in a telephone interview that she was "devastated" by the verdicts and she maintained that she was falsely accused of copyright infringement. She said she hasn't decided whether to appeal the verdicts, which declared that she had "willfully" violated the copyrights of 24 songs and was liable for damages of $9,250 for each.

She said she's certain, however, that the Recording Industry Association of America (RIAA) might have trouble collecting the judgment. "I'm a single mother who makes $36,000 a year -- you can't get blood from a turnip," said Thomas, a member of the Mille Lacs Band of Ojibwe who works as a program administrator in the band's natural resources division. She said she would consider bankruptcy as a last resort.

Her trial drew national attention because it was the first against a customer to reach that stage. Thomas said she could have settled in 2005 for $4,750. She said she had believed the industry would drop the suit, as it had others, if she held out.

Significance doubted

Richard Gabriel, the plaintiffs' lead attorney during the trial, said afterward that the amount of the award and even whether it can be collected aren't as important as its potential to discourage music piracy. But many industry experts doubt that potential.

"It may cause some people to think twice, but is it going to curb file sharing? Not a chance. That horse is out of the barn," said Mark Avsec, a Cleveland-based intellectual property rights attorney, music producer and former member of the band Wild Cherry, which had the 1970s hit "Play That Funky Music."The era of making people pay $18 for a CD when they just want one song is gone," Avsec said.

Added Phil Leigh, president of research firm Inside Digital Media in Tampa, Fla.: "The lawsuits make people angry, and that's not a good relationship to have with customers."

There's evidence that the once-powerful recording labels are losing their influence, Munster said.

"Record labels used to create stars by promoting performers with radio stations," Munster said. "Now people discover new music online. The value of the record labels is quickly fading away."

Some University of Minnesota students in Minneapolis said the court decision will make them think twice about downloading illegal music; others said they aren't worried.

"I don't want to have to pay $200,000, no way," said Michele LaBathe, a sophomore in anthropology from Scandia. "People will be more aware that ... they shouldn't do it."

But Max Paletz, a junior from Minnetonka majoring in marketing and mass communications, countered: "I don't think the court decision will scare anybody. The likelihood that you'll get caught is not very great."

That may be the prevailing opinion among students, despite annual warnings about copyright infringement, said Linda Deneen, director of information technology at the University of Minnesota Duluth.

"The culture seems to be, 'I won't be the one to get caught, and everybody else is doing it,'" Deneen said.

Consequences may be more likely from the provider of Internet service than from the law. Last year at UMD, for example, 300 students were sanctioned for suspected music piracy and other Internet misuse by having their college-provided broadband service interrupted as a warning.

New business model?

Leigh says even more change may be ahead. He thinks the music industry may wind up giving away songs.

"Providing free availability of legitimate music over the Internet in exchange for advertising revenue is a huge new opportunity," Leigh said. "Broadcast radio, which is essentially free music, brings in $20 billion a year from advertising. Even at their sales peak, music CDs had only $14 billion in sales."

Or, as Avsec put it: "The music business has never been healthier; it's the record business that's sick. Imagine if you could figure out a way to charge everybody who wanted to share files a $10 monthly subscription. I don't know if that's the answer, but it will be something proactive and creative.

"We'll be in a new model in a few years where everybody will make money. ... I don't think anybody enjoys suing their fans."

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