Students Cave to RIAA

Students are often described as people with more time than money. For four accused by the recording industry of being "nodes" for file sharing, the lack of money will almost certainly extend well beyond graduation day.

At the beginning of May, four students charged with massive copyright infringement settled out of court, agreeing to pay between $12,000 and $17,500 each to the Recording Industries Association of America. Terms of the deal, in which the students admitted no wrongdoing, specify that payments will be made in installments through the year 2006. The lawsuit was launched last month after RIAA investigators found Jesse Jordan and Aaron Sherman, at Rensselaer Polytechnic Institute in Troy, NY, Daniel Peng at Princeton University, and Joseph Nievelt at Michigan Technological University were running file-sharing operations that enabled hundreds of thousands of downloads. Had the defendants chosen to fight the charges rather than cave in, they might have faced damages of as much as $100 million.

The suits were settled despite a federal judge's recent ruling that the corporate backers of file-sharing services Grokster and Morpheus couldn't be held liable for copyright infringements performed using their systems. With this legal victory, the RIAA hopes to discourage other students from similar activities. "The message is clearly getting through that distributing copyrighted works without permission is illegal, can have consequences and that we will move quickly and aggressively to enforce our rights," said Matthew Oppenheim, the RIAA's general counsel and senior v.p. of business and legal affairs.

The pursuit of the students is evidence that the RIAA will make good on its threat to go after businesses or individuals found to be blatantly disrupting its business model. It's also evidence of the music industry's desperation to regain some control over its ever-declining revenues – a move that could blow up in the industry's face. Students have always been the most ardent music fans, willing to spend a disproportionate amount of their meager income on their favorite artists. The settlement may temporarily discourage file sharing, but could prove to be a Pyrrhic victory for the music industry, increasing the already widespread public resentment against it.

Suing your customers is never a wise business move. It hints of selling "insurance" at gunpoint. In that context, a comment made in passing by Michael S. Malone in a May 2 ABC News cheerleading piece on Apple Computer's new subscription music service bears repeating. "There is no little irony to the fact that the music industry, which has made billions celebrating the outlaw life, based in a town founded on movies idolizing Prohibition-era gangsters, is now in the business of suing . . . children for bootlegging," Malone writes. Such efforts, he believes, will hasten the "development of new technologies that will eventually kill the record industry."

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