Music crime – is the record industry buckling under the pressure?

Illegal downloading is a devastating problem for the record industry. £650 million was lost last year to music crime and £1.1 billion in the three preceding years.

Illegal downloading takes place when a user obtains a digital music file over the internet. The source of this digital file is known as the uploader. More often than not the two are synonymous with each other as, whilst a user is accessing a file to download, the content of their music catalogue stored on their PC is available for selection by another downloader.

Downloading a music file without the permission of the record company or making a file available to be downloaded is illegal. Copyright law provides that a person must have explicit permission from the copyright owner before conducting either of these acts.

The Copyright, Designs and Patents Act 1988, s 16, grants a copyright owner (in the case of music this is usually the record company) an exclusive right to copy and to communicate works to the public. Section 20 also provides an exclusive right to make “available to the public the works by electronic transmission in such a way that members of the public may access it from a place and at a time individually chosen by them.”

It is clear that the transmission of music files over the internet without the permission of the music company is an infringement of copyright. However, it is the ramifications of this infringement which really weighs heavy on the music industry.

Firstly, it is estimated that illegal downloading has led to a 22 per cent decline in sales worldwide. Secondly, this decline affects investment in new music. In 2004 the UK re-invested £207 million in new artists. It stands to reason that the bigger the chunk illegal downloading takes from the profit of the music industry, the greater the chunk which is withdrawn from re-investment into new talent.

In order to beat the phenomenon of music sharing via the internet and its impact on the record industry, a worldwide push against music piracy has seen the collective fight by the major countries of the world to claw back some of its lost revenue.

The British Phonographic Industry is the leading UK trade association which represents artists and record companies and leads the fight against music piracy in the UK. It has to date issued numerous warnings to illegal file sharers and as its patience ran out, it took action against 14,200 major uploaders worldwide (up to July 2005).

Despite the fact that 2.6 billion files are illegally downloaded each month, there still exists a large people in the UK who are not fully informed as to the process or methods of file sharing over the internet and the threat of action being taken against them. This is particularly prevalent amongst parents whose children are committing such acts. A government survey revealed that a quarter of people aged 10 to 25 have illegally downloaded material over the internet.

As the internet account holder is the first point of contact for the British Phonographic Industry when commencing proceedings for illegal file sharing, it is important that parents fully understand the problem and the consequences attached to illegal file sharing. The next section of this article focuses on the how and where of file sharing, its detection and consequences and the precautions which can be taken.

How is it done?

Downloading of music files over the internet is facilitated by software know as peer-to-peer file sharing software. This is readily available over the internet and the basic packages are free to users. Providers of such software make their money by using the volume of hits on their websites to attract advertising revenue and product placement. Providers of such software include Limewire, Winmx and iMesh.

The software essentially creates a connection via the internet between two or more computers. The user searches for the file of their choice (for example a song or an album), and a list of matching files which are contained within the memory of a computer which is connected to the same software is retrieved. The user then selects the file of their choice and the software enables the file to be transmitted from the computer which holds the file (uploader) and the computer which has requested it (downloader). Once this file is stored on the downloader’s computer it is then available to be further downloaded by another user. This is where a downloader, regardless of intention, becomes liable for an action for copyright infringement.

How is it utilised?

Once the user has the file stored on their computer, they are able to transfer that file to an mp3 player or indeed burn it onto a disc in order to play it on a CD player etc. It is this ability which has damaged the music industry so deeply. For example, once the user has successfully downloaded an album and burnt it onto a disc, the need to go out and purchase the equivalent CD from a store becomes redundant.

How is it detected?

The BPI log on to the internet and access the software detailed above. It then downloads a file. Each file which is downloaded via the internet contains an internet rotocol (IP) address which is the address of the computer from which the file has derived. The BPI then obtains a High Court order to force the internet service provider (the company from which the internet service is purchased) to reveal the identity of the owner of the computer which has facilitated the illegal download. The BPI then uses these details to begin legal proceedings against the owner of the computer for copyright infringement.

What fines are imposed?

The fines imposed on the file sharer depend on the volume of illegally shared files. However, most instances are settled out of court with settlement figures ranging from £2,000 to £6,500.


The BPI asks that parents supervise their childrens’ activity and help them understand how to use the internet without breaking the law.

One solution is to allow supervised access to a website which enables the user, for a minimal fee, to download music legally: eg, and For a comprehensive list of authorised music download services available see

The law – where are we now?

There has been a plethora of cases which have seen large record companies attempting to shut down providers of software facilitating illegal file sharing.

On the whole, these actions have failed due to the existence of the infamous Betamax case. This case Sony Corp (SNE) v Universal City Studios Inc held that as the technology (in this instance the Betamax tape recorder) could be capable of “substantial non-infringing use”, it would be improper to prevent the use of such technology. It also held that this would stifle innovation. For a Wikipedia report on this case, see Sony Corp v Universal City Studios.

However, the recent US Supreme Court decision in Metro-Goldwyn-Mayer Studios Inc v Grokster Ltd has somewhat shaken things up. This case held that Grokster should be found liable for copyright infringement as it substantially advertised and induced the use of the software for copyright infringement purposes. For a report of this, case, see MGM v Grokster from the Electronic Frontier Foundation. Grokster was subsequently ordered to pay $50 million to the record industry. It has also ceased to provide a peer-to-peer file sharing service. This decision has certainly muddied the waters in relation to the position of peer-to-peer file sharing services. It would appear that so long as the provider does not excessively advertise its service for the purpose of copyright infringement then it will, for now, escape liability.

One thing is for certain, this will not be the last time a major record label and a peer to peer service provider do battle. The Betamax case has for so long kept its head above water and helped facilitators of illegal copying to exist and exist without prosecution. On this basis it will take a big decision to overturn the legal position on this. The Grokster case, some argue, is a step in this direction. Others suggest that its decision derived from extreme circumstances which has functioned only to warn similar websites and helped them modify to remain within the law.

The future

As the various trade associations battle to reduce the substantial losses caused by illegal file sharing websites, what is clear is that it will be long time before the weight of this phenomenon is lifted.

Various techniques have been introduced in an attempt to fight back and they do appear to be making a small impact. A recent TNS Worldpanel survey suggests that the percentage of the population illegally downloading has fallen from 16 per cent in 2004 to 15.4 per cent in 2005. The percentage of users choosing to utilise legal download service has also doubled in recent years.

It appears, however, that this problem must be tackled by cracking down even more heavily on illegal file sharers. At the same time, the music industry should be providing more incentives to individuals to use an authorised legal service. By doing this the authorities may slowly chip away at the problem. A recent survey suggests that 45 per cent of illegal file sharers are open to persuasion, so persuade them!

National and European digital download charts have been introduced in an attempt to entice users to use a legal service so that their download counts towards the official music charts. Prices of legal downloads have also been slashed, however, it could be argued that there is still a long way to go in this respect.


Music crime is a crippling problem for the music industry. It is causing loss of sales for record companies, loss of royalties for the song writers, loss of investment in new emerging talent and, as a an overall consequence, is affecting the economy.

So how can it be stopped? The trade associations are facing an uphill battle to prevent illegal downloading. It will need collective support from all of the major countries in the world, its governments, record companies, educational institutions and parents to make a dent in this problem.

An alternative conclusion

The problem of illegal file sharing is not going to disappear quietly. It is easy to see why billions of individuals acquire their music digitally over peer-to-peer networks. Firstly, it is free. Secondly, it is just as good quality as a legal download and finally, the price of both legal downloads and CDs are still too high.

Music companies have endeavoured to lower the costs of CDs, but given the large profit made on such sales, it could be argued that these prices could still come down some way yet. Until consumers are offered an affordable alternative to illegal downloading, they are unlikely to turn their heads and look at any legal forms of music.

Jody Tsigarides is a trainee solicitor at Lawdit Solicitors. He holds a Masters (LLM) in intellectual property law. He specialises in trade mark law and also advises clients on all areas of commercial law.