It almost brings tears to one's eyes.... the thought that a midwestern mom might be sued by the big, evil recording companies for violating their copyrights by downloading files from the internet. See the story here. Here are some skeletal facts:
A jury has handed a victory to the music recording industry, which had claimed a Minnesota woman infringed song copyrights by using online media to illegally download and distribute music, according to court documents...This was a jury verdict. Also the woman had more than 1700 music files available for others to download.
The recording companies sued Thomas in April 2006 after 1,702 music files were traced to a computer tied to her, according to court documents. Investigators on February 21, 2005 located an individual with the screen name "tereastarr@KaZaA" using the Kazaa file-sharing software program, according to the documents.
"This individual was downloading copyrighted sounds [sic] recordings from other users of the Kazaa network, and was distributing copyrighted sound recordings stored on her computer to other Kazaa users," the plaintiffs said.
There is considerable evidence that file-sharing caused considerable harm to the firms in the recording industry. Probably the best scholar in the field on this topic is Stan Liebowitz:
The weight of current evidence strongly supports a view that file-sharing diminishes the revenues of the recording industry. There are two forms to the evidence.Liebowitz's piece has numerous links to research that supports his views. It also carefully dissects the article in the JPE which purports to have found no link between file-sharing and CD sales. Liebowitz is a careful scholar. Sadly, as Craig Newmark notes, he has run up against a stone wall in trying to replicate the results of the JPE study. Steve Levitt, editor of the JPE, should be ashamed of himself for not jumping on this; clearly the resistance by the original authors to making their data available violates the journal's policies. But even without access to their database, Liebowitz has a careful, item-by-item critique of their results. See here, for example.
The first has to do with general factors: the timing between record sales declines and file-sharing is very close; the current decline is very large compared to previous declines; there are no other explanations for the decline in record sales that hold up upon analysis; economic theory implies that record sales will fall. ... [W]hat appears to be the best estimate of the number of audio files downloaded reports that files downloaded are generally less than one tenth the amounts of previous estimates. File-sharing appears to have hit record retailers less severely than it has hit record clubs, causing possible underestimates of harm by those looking at statistics from retailers. Finally, the claims that DVD sales have been responsible for the decline in CD sales (for those articles that provide any evidence at all) have been based on a statistic that provides a misleading picture of the DVD market. ...
The second form of evidence can be found in econometric studies of the industry. All the econometric studies, except one, find some degree of harm. I have written a recent paper (forthcoming in Management Science) that examines record sales and Internet uses in 99 US cities to measure the impact of file-sharing. ... The methodology avoids many empirical difficulties found in other papers. It concludes that file-sharing is responsible for the entire decline in record sales that has occurred, and that except for file-sharing there would have been an increase in sales since 1999 instead of the strong decline. It also examines which genres had the greatest impact from file-sharing, and they are consistent with intuition (genres appealing to older individuals have the smallest sales decline, and vice-versa).
For more on the economics of file sharing, see the April, 2006, issue of the Journal of Law and Economics. Liebowitz has the lead article there.