Charles Arthur On Technology

End of the peer show?

Is file-sharing really on the wane? And if it is, what's the true cause? If you believe the UK's biggest record labels, in the form of the British Phonographic Industry (BPI), we are already on the road to the Elysian fields where everyone buys their music either legally online or legally in shops, and never duplicates a CD or wanders on to a file-sharing network.

Is file-sharing really on the wane? And if it is, what's the true cause? If you believe the UK's biggest record labels, in the form of the British Phonographic Industry (BPI), we are already on the road to the Elysian fields where everyone buys their music either legally online or legally in shops, and never duplicates a CD or wanders on to a file-sharing network.

Well, they can hope, but it's wise to have something helping things along. On Friday, they won a High Court order that will see six internet service providers forced to hand over the names of 31 people the BPI alleges have been making "large numbers" of songs available through such networks. The previous week, the BPI got 23 out of 26 people it had brought cases against on the same grounds to make out-of-court settlements, paying up to £4,000 (average £2,000) each.

So what's the trend in file-sharing use? Interestingly, it does seem to be vaguely downwards, although it's very hard to pin that down to a particular country. And it might be more correct to say that the trend in online music file-sharing is not growing, but stabilising. "File sharing has become firmly established among UK internet users, massively outperforming the legitimate services, as shown by some recent Jupiter consumer survey data," says Mark Mulligan, an analyst at Jupiter Research. "Legal action has to be seen as part of a slow integrated strategy that will, bit by bit, reduce the impact of file sharing. But it's not going to wipe it out. The utopian ideal of a world without illegal file-sharing simply won't happen, in the same way as shoplifting will never wholly disappear from the music retail equation."

On the plus side for the BPI, the trend in online music-buying is relentlessly up, to the extent that in the last week of 2004 it outstripped sales of physical CD singles. With the shops open again, online songs sell only about one-tenth of the physical ones. But it's catching up.

So is the BPI right to claim, as it has, that this is because its legal threats are taking effect, while online stores such as iTunes and Napster become more prominent in peoples' thinking? I think there are less obvious reasons for the apparent fall in such sharing, and most come bundled with the file-sharing programs themselves. They're the insidious adware programs added to the free programs such as Bearshare, KaZaA, Grokster, iMesh and eDonkey.

The reason they're bundled? First, while everyone seems to be getting a free lunch by downloading music without payment, the writers of the adware reckon they can at least rent out the space on the table. Developers of "peer-to-peer" (P2P) software are thus regularly approached by makers of adware who offer money to get their programs included in the finished product, because tens of millions of people use file-sharing programs, no matter what efforts the BPI and its US cousin, the Recording Industry Association of America (RIAA), make to sue the users and program writers into retreat.

The spyware and adware fighter Ben Edelman did an interesting comparison on what the P2P programs really add to your hard drive, which he wrote up on his blog last week ( www.benedelman.org/news/030705-1.html). Although the study was itself sponsored by one of the P2P programs, LimeWire, with the fairly clear agenda of dissing its rivals, the evidence is still stunning.

The licence agreements these programs expect you to click "Agree" to run to tens of thousands of words. The reality is that reading these agreements is a superheroic effort that most people won't bother with, as they don't with almost all click-through agreements. And the programs come with some truly frustrating add-ons that will do all the classic adware things - add dozens (even hundreds) of entries to the Windows Registry, add pop-ups to Internet Explorer, and generally slow your computer down while making your online life a misery.

I think people have come to recognise this: that it's the adware that comes along for the ride and then takes control when you install a P2P program that really causes havoc, not the program itself. However, generally you can't get the one without the other, although Edelman found that LimeWire limits itself only to nagging the user to upgrade to the paid-for version if they use the free one.

I think any downward trend in the use of file-sharing programs is down to that rather than the BPI having struck fear into the hearts of teenagers or parents. For one thing, the lawsuits have progressed in a remarkably low-key fashion. Although three of the first tranche of cases may attract extra publicity by reaching court, it was pretty quiet between October and the announcement.

The weakness for the BPI and RIAA is that their argument that every song downloaded (or indeed uploaded) is a lost sale is palpably false, because not everyone is prepared to pay for every song they'll download for free.

An interesting discussion has taken place in the past few days on what the best price would be for online music downloads. At the Canadian Music Conference in Toronto, Sandy Pearlman of McGill University (and former producer of The Clash) suggested 5 US cents (plus a 1 per cent tax on new computers). The music business is having none of it. In fact, what the record labels really want is to raise the price of online songs; they're unhappy at the 79p that Apple charges in the UK. They think it's too low.

Pearlman argues that dropping the price would lead to exponential growth in downloads, thus recouping any apparent "lost" revenues. And, as online music sells much more "back catalogue" (stuff you can't find in most record shops), all its costs have already been paid. But no; the record labels want to hike the price, and kill the goose that is laying these new golden eggs. From suing its customers to soaking them, you have to agree that it is at least consistent.

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