High Stakes Sharing

The name Yagan is synonymous with entrepreneurship at Harvard. Current Currierite Daniel F. Yagan ’06 is one of the founders of Redline Textbooks, an online textbook vendor with a loyal following among Harvard’s budget-conscious students. Yagan recently diversified Redline’s textbook offerings and expanded its stock. His older brother, however, has been less fortunate.

Sam A. Yagan ’99, president of MetaMachine, the company that distributes the peer-to-peer program eDonkey, announced at a U.S. Senate Judiciary Hearing on Sept. 28 that his company would “convert eDonkey’s user base to an online content retailer operating in a closed P2P environment.” He did so in response to a cease-and-desist letter from the Recording Industry Association of America (RIAA) which threatened immediate litigation unless MetaMachine blocked the sharing of copyrighted content on its networks.

Since a June 27, 2005 Supreme Court ruling against Grokster gave record labels and movie studios the green light to sue file-sharing services, the RIAA has been busy with a letter writing campaign to shut down these services. Though file-sharing services are only guilty of a crime if they encourage illegal downloading (and Yagan steadfastly holds that eDonkey did not), these services lack the resources to fight the RIAA in court. Driven by an arrogance born of its deep corporate coffers, the RIAA is muscling legitimate startups out of business because some users are using the software to commit copyright violations. By doing so, the RIAA will only succeed in driving file-sharing services offshore, where it can’t touch them. It would be better off filing suits only against services that explicitly encourage the sharing of copyrighted materials.

The RIAA’s campaign against file-sharing services is only a sideshow, however, to its ongoing, two-year-old initiative to sue individual copyright violators. Though the RIAA has sued only about 13,000 of the estimated 60 million Americans using file-sharing software, according to the Electronic Frontier Foundation, these 13,000 people are disproportionately students. Settlements for affected students range from $4,000 up to as much as $8,000, not including legal fees. Clearly, if students at college campuses across America are going to continue illegally sharing files, they’ll need to wise up.

Not all file-sharers need to fear, however. So far, the RIAA has only targeted uploaders of copyrighted materials, meaning that students who only download files will not face legal action. Programs like myTunes and ad hoc file-sharing networks on campus and networks based in certain other nations have not been affected by the RIAA’s lawsuits either.

The RIAA will never succeed in changing the habits of 60 million people in the U.S. and untold other millions worldwide. To put the risk-reward equation into perspective, if an average settling cost of $6000 for the 13,000 people sued so far were distributed across the entire file-sharing population in America, everyone using the software would owe $1.30. With CDs selling for $15 a pop, and individual songs going for $.99 on iTunes, we see little chance that $1.30, or even $130, will dissuade an entire generation accustomed to file-sharing from illegally serving copyrighted materials. Instead of punitive lawsuits, the RIAA should seek less divisive, alternative ways to ensure the music industry gets its due. It should embrace reality before the file-sharing arms race it is spurring makes reality impossible to tackle.