And that is how it ends...
Students Settle with RIAA on Song-Swap Sites
Thu May 1, 2003 08:05 PM ET
By Sue Zeidler
LOS ANGELES (Reuters) - A recording industry trade group said on Thursday it reached settlements, ranging from $12,000 to $17,500 each, with four college students it claimed had been operating illegal song-swap networks on campuses.
While the settlements were lower than the hundreds of millions of dollars initially sought, the industry expects they will serve as a deterrent to individuals running "peer-to-peer" services, which let users download files for free.
The settlements also capped a turbulent week for the music business, marked by a flurry of court rulings, the launch of a new commercial music service by Apple Computer Inc. and the unveiling of new anti-piracy tactics by the industry.
"Given that these were the first lawsuits of this kind and that these individuals had limited means, we believe that the settlements were appropriate," said Matt Oppenheim, senior vice president of business and legal affairs for the Recording Industry Association of America. Oppenheim said future settlements may require stiffer penalties.
The RIAA is the trade group for the big five labels, including AOL Time Warner, EMI Group Plc, Bertelsmann AG, Vivendi Universal Music and Sony Corp. .
Earlier this week, the RIAA began sending out millions of instant messages to Web song swappers saying they could be "easily identified" and face "legal penalties."
The mass messaging followed a major legal setback for the industry in its efforts to shut down song-swapping services.
Last week, U.S. District Court Judge Stephen Wilson ruled popular song-swap services like Grokster and Morpheus should not be shut down because they could not control what is traded on their systems.
Film and music studios vowed to appeal the ruling, which at the same time appeared to point the industries toward more aggressive actions against individuals.
The labels' mounting focus on individuals first surfaced last month when the RIAA sued the four students, including Princeton University student Daniel Peng, Michigan Technical University student Joseph Nievelt, and Jesse Jordan and Aaron Sherman at Rensselaer Polytechnic Institute.
The RIAA had likened the students' file-sharing systems, which were open only to students on the universities' internal networks, to miniature versions of Napster -- the software and network that led to the explosion of music file swapping.
It said the four networks were offering nearly 2.5 million files, including more than 1 million files on the largest of the networks.
The complaints asked for the legal limit on damages in such cases of $150,000 per each copyright infringed.
Lee Black, analyst with Jupiter Research, said the settlements may serve as a more realistic assessment of damages brought by file-sharing applications. "It certainly sends a message to people on campuses that they can now be held monetarily liable for infringing copyrights," Black said.
Others agreed. "I think this will be an effective deterrent, even if it doesn't have the shock value of a multi-million dollar settlement," said Gregg Lee, analyst with Raymond James and Associates. "I don't know too many college students who have $15,000 lying around."
The RIAA said at least 18 "local area Napster networks' or campus peer-to-peer services have come down since it filed the lawsuits.
But lawyers for 18-year-old Princeton University student Peng, said terms of the settlement actually reflected the strength of Peng's position under copyright laws. They said the settlement contained no admittance of guilt by Peng.
"It is unfortunate the recording industry, in trying to protect their profits, used the legal system to intimidate students who are often their best customers," said Peng's lawyer, Howard Ende at the firm of Drinker Biddle.
"I don't believe that I did anything wrong. I am glad that the case has been settled amicably, and I hope that for the sake of artists, the larger issues can soon be resolved," Peng said in a statement.