File sharing – Good for users, but damage for industries?

Digging further into the topic of file sharing after my last post about the blocking of the online movie portal kino.to, I started considering the music industry as well and the possible effects on corporations in the movie and music business.

While in the US and Germany providing a website with links to pages hosting movies and TV shows is apparently illegal, since the police arrested several persons connected to kino.to, in the UK it is handled differently.

Under UK law, setting up a website that only provides links to other sites which host movies and TV shows online or music downloads, but does not host actual content, is not illegal and does not violate copyright law, states Yonah in a blog post about an imminent extradition of a file-sharing site founder from the United Kingdom to the US.

The majority of bloggers I came across for my last week’s post stated that only watching illegal streams on such portals is not illegal, but the GVU (Gesellschaft zur Verfolgung von Urheberrechtsverletzungen e. V.) does not agree with that. It explains that due to temporary storage on the user’s computer, which always happens while watching movies online, it is illegal.

Does illegal file sharing damage the industry?

This however is not the only aspect which makes the shutdown of kino.to so appreciated by the GVU and movie producers. On the GVU blog statements by various persons from that industry have been made public, including the reaction from Alexander Thies, chairman of board of directors, Allianz Deutscher Produzenten – Film & Fernsehen.

“Wir Produzenten begrüßen die Abschaltung von kino.to wirklich sehr und freuen uns, dass es nach Jahren der Unsicherheit gelungen ist, dieses für die Internet-Piraterie zentrale Angebot so nachhaltig zu treffen. Die illegale Verbreitung unserer Werke bedeutet einen massiven wirtschaftlichen Schaden für die Branche.“

(“Producers appreciate the shutdown of kino.to […] The illegal distribution of our works is a massive economic damage to the industry.”)

Not only in the movie production file sharing is considered to have negative economic impact on the industry, also in the music business damages have been severe.  If it wasn’t for piracy in the music business, sales would be 72 % higher, states the International Federation of the Phonographic Industry (IFPI)  in the annual digital music report, referring to a study by Adermon & Liang of Uppsala University in Sweden.

A popular file sharing platform, LimeWire, has recently experienced the consequences of providing peer-to-peer service. In The End of Peer-to-Peer File Sharing?  a post about copyright issues in file sharing and the recent happening concerning LimeWire’s accusation of copyright infringement. The economic damage it caused is probably a lot higher; however it was agreed on $ 105 million that LimeWire has to pay to major labels.

Ways to reduce internet piracy?

Companies in the music and movie industry have severe economic losses through illegal file sharing. Would lower prices for the movies and music prevent or at least reduce internet piracy? Could companies actually benefit from that, if they got less money per movie/song but more people to watch and download them legally?

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One Response to File sharing – Good for users, but damage for industries?

  1. arinanira says:

    Hey Karen!

    First of all: Very nice topic choice!
    The question on selling vs. sharing has emerged with the growth of the internet itself and there’s still no ultimate solution concerning that one. The recent kino.to controversy contributed a lot to the popularity of this topic. I really like the way, how you explained the (german) industry’s position on file sharing, while mentioning the fact that this issue is not handled the same everywhere! But I think that the problem with the method of handling things by simply forbidding something does not pay enough attention to the ‘root of the problem’…

    I wrote a post on a very similar topic: real world regulations of the internet and vice versa internet regulations of the real world. My main point is that the internet is actually the best place to visualize supply-and-demand’s influence on real world businesses, such as the entertainment industry for example. (If you happen to be interested, you’re very welcome to visit: http://futurima.wordpress.com/2011/06/23/who-rules-the-www/)

    I do not think that criminalizing (potential) customers is the best answer to modern day needs. It is not enough to intimidate P2P-users to make a drained industry perform well again.
    And if people are taken away LimeWire without being given some nice alternative in return, it is no wonder that P2P starts flourishing underground: In from of ‘Dead Drops’ offline P2P file sharing for example! (Here’s a link to their official site: http://deaddrops.com/)

    Anyways, I think that this topic has lots of space for debate!
    It was a pleasure to read your article.
    Thanks!

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