Ethics of using Peer-to-Peer File Sharing Applications
Prepared By:
Jeff Birch
Ethics in a Changing Organizational Environment
BUSI – 529
Monday 6pm
10-June-2003
Robert L. Waltz
Table Of Contents
Executive Summary: ...................................................................................................................................... 1
Purpose Statement: ......................................................................................................................................... 2
Body ............................................................................................................................................................... 3
Impact to Internet Service Providers (ISP) network ................................................................................... 4
Security ....................................................................................................................................................... 4
Pornography ............................................................................................................................................... 4
Historical Issues: ........................................................................................................................................ 5
Conclusion: ..................................................................................................................................................... 6
Appendix: ....................................................................................................................................................... 9
Endnotes: .......................................................................................................................................................13
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Executive Summary:
A vast population of our American community is growing up with the perception that downloading
information from the internet without compensation to the intellectual property right or copyright holders is ethical
and right. (See Figure 1 in the Appendix) In some cases, a growing segment of this population feels it is an
entitlement, something that they have the right to do. Several factors encourage this behavior: the proliferation of
more powerful computers in the home, high speed internet connections available at residences and schools, and
easier to use software that facilitates the downloading of information. It is this last characteristic that is the
motivator behind this paper.
In an article in Time Magazine, Lev Grossman writes, “somewhere along the line, Americans – indeed,
computer users everywhere have made a collective decision that since no one can make us pay for entertainment,
we’re not going to.” 1 He goes on to contend that as far as victimless crimes go, downloading files from the internet
is tearing the entertainment industry apart. Jack Valenti, head of the Motion Picture Association of America
(M.P.A.A.) is quoted saying, “If we let this stand, you’re going to see the undoing of this society.” 2 These are very
strong words from a top executive of a very powerful industry. In the past month, two legal decisions have been
made on both sides of the battle. One decision favored the entertainment industry, the other against it.
This paper represents several ethical dilemmas. The first ethical dilemma involves the laws that have been
developed to protect the intellectual property and copyrights of others, yet a large segment of our population does
not recognize and may even ignore their existence. The second ethical dilemma is the rapid growth in the
development and use of software that enables internet users to share protected material between them without going
through a centralized service. Hence, society itself is changing the way entertainment is conducted and how media is
distributed.
Survey results indicate that a very large portion of the population does not find any ethical or legal issues
with downloading and sharing movies, music and other information from the internet.
How do we as society protect the intellectual property rights of actors, artists, and musicians, to name a
few, to ensure that their right to life, liberty, and the pursuit of happiness can be achieved not just in this country, but
globally? After all, the internet is not just an “American” invention, it is global.
Can Peer-to-Peer file sharing applications be harnessed to work with our traditional values that dictate that
unauthorized use and access to these types of media are an infringement on intellectual property rights and is indeed,
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stealing? Or will legislation be needed? Will our cultural ethics rise to the occasion and deal with this issue
equitably or will our social ethics be further diluted, and as Jack Valenti states, “undo this society”?
Purpose Statement:
According to a survey conducted by Edison Research in June 2002, 56% of young people between the ages
of 12 and 17 have downloaded music files from the internet for playback at another time. A majority of these
young people felt that they were doing nothing unethical by downloading music from the internet and then either
copying the music to CD’s or keeping the files on their computers for later playback. (See Figures 3 & 4 in the
Appendix)
This trend is hurting the movie and music industry as survey results show that those that download music
off the internet are less likely to buy music. (See Error! Reference source not found. 2 in the Appendix) These are
disturbing trends for the movie and music industry. Although the movie and music industries are starting to act
now, they are way behind the curve. "The culture has shifted," said Russell Simmons, chairman and CEO of Rush
Communications and cofounder and chairman of Def Jam Records. "It's not about buying music anymore. If the
industry doesn't respond to that change quickly, it's going to be in big trouble. We can't shut these people down." 3
“These people” refers to the millions of people who download music from the internet and use peer-to-peer (often
referred to as P2P) file sharing applications. As an example, Morpheus, a peer-to-peer file sharing application
boasts that 111,953,088 people have downloaded their application. This is more than just a trend; it is becoming a
way of life for many young people. As more and more consumers become increasingly savvy in using their
computers and the internet, they are welcomed into a world where just about any movie or music title is just a few
mouse clicks away.
Recently Apple Computer Inc. introduced a new software product for their Macintosh line of computers,
iTunes. iTunes allows users to buy songs from Apple’s Music Store for 99 cents, download them to their computers
and cannot be copied onto no more than two additional Macintosh computers.4 It provides the capability that allows
Macintosh users to share the files on the same network. The intent was to allow the same music file to be shared
with other Macintosh computers on the family network. The first week that iTunes was release, Apple Music Store
records over 1 million downloads of songs, which was much more significant than they anticipated. Users, however,
being creative and full of initiative found a way to “tweak” the software so that their music collections could be
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shared with a wider network, the internet. Along the way, programmers developed a method allowing people to
copy songs found on other Macintosh computers with one other. Within two weeks of the release of iTunes, several
web sites sprung up to provide assistance for users to connect with each other to share their music files.
Apple
executives have not released any formal statements, but are rumored to be working on “tightening” the security of
iTunes to discontinue this process. However, from a consumer’s point of view, this is just another example of a
peer-to-peer file sharing application that successfully allows them to share music files with other Macintosh users on
the internet.
Body
Below are categorized some of the issues that have been identified. These are the “traditional” issues that
are tangible and measurable. What is not listed is the impact to society as a whole. How will this impact society’s
norms and cultural ethics? We may never know.
Copyright Infringement
Downloading or distributing copyrighted material, e.g. documents, music, movies, videos, text, etc.,
without permission from the rightful owner violates the United States Copyright Act. While it is true that a number
of artists have allowed their creative works to be freely copied, those artists remain very much the exception. It is
best to assume that all works are copyright-protected except those that explicitly state otherwise.
Those who obtain or distribute copyrighted material should be aware that if found liable for copyright
infringement, the penalties can be severe, depending upon the amount and the willfulness of the infringing activity.
In a civil lawsuit, one found liable for copyright infringement can be ordered to pay damages of as much as $30,000
per copyrighted work infringed. This penalty can be increased to $150,000 per infringed work in cases of
particularly flagrant infringement. In the most serious and widespread cases of copyright infringement, criminal
prosecution is possible.
Additionally, users, who may be in violation of copyright law, place not only themselves at risk - they may
be exposing their Internet Service Provider (ISP) to liability as a provider of the server, for contributory or vicarious
infringement, e.g., using the ISP’s network resources to obtain their identity. A recent court case demanded Verizon
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identify the internet protocol (IP) address and identity of users who were downloading excessive amounts of movie
and music files.
Impact to Internet Service Providers (ISP) network
Peer-to-peer file sharing applications typically allow a user to set up their computer so that other people can
access specific files on their computer. This process, in effect, converts the user’s computer into a server. (See
Figure 5 in the Appendix) While this might seem like a nice service to offer, there are some serious drawbacks.
A user’s computer acting as a server can place an enormous burden on an ISP’s network(s). If the
computer/server is popular and does excessive, high-volume transfers of files, this single computer/server can
severely impact the performance of an ISPs network. Imagine the impact if there are several computers/servers
functioning in the same manner. For example, music files (MP3) are usually very large files, between 2 and 10 MB
in size, and movie files (DivX) can be enormous, averaging 600 MB in size. Some Peer-to-Peer applications let you
choose NOT to be a server, but others, such as Gnutella, don't. Some Peer-to-Peer applications allow you to choose
whether or not to be a server, while others, such as Gnutella, do not. If users simply install the software and don't
take the time to read the documentation, they may not realize their computer is acting like a server.
Security
Another serious problem with setting up your computer as a server is you could be reducing the security of
your system. Thus, allowing a cracker (computer criminal) to more easily compromise your entire computer and
gain access to private and personal data.
Pornography
Lastly, new reports indicate that Peer-to-Peer applications are being used to disseminate pornography. It is
not known at this time if this is done with the authorization or knowledge of computers/servers participating with
Peer-to-Peer applications.5 However, some findings indicate that users may not be knowledgeable of some files that
are being shared “through” their computers. KaZaA and Morpheus have publicly stated that they are researching
these allegations and will make corrections to their software to ensure users are aware of all files that are being
shared with and through their computers.
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Historical Issues:
To some extent, we are entering uncharted territory. There are some similarities to the issue of copying music
to cassette tapes back in the 1970’s and 1980’s which led to legislation that required that every cassette tape sold
would require the manufacturers of the tape to pay the Recording Industry Association of America (RIAA) a fee.
This legislation was upheld with the advent of recordable Compact Discs (CDs). However, with the ability to
”digitize” movie and music files and place them on the internet, no physical media is involved, hence, there is no
single entity with which to address issues of compensation for copying material. The closest case to this issue is
Napster.
Napster was a file sharing type application with one distinctive difference; it used a centralized server to
coordinate services with computers connected to the internet. This difference allowed the RIAA to successfully sue
Napster.
Napster attempted to defend itself based on a 1984 Supreme Court ruling in the Sony Betamax case which
held that Sony was not liable for copyright infringement because its videocassette recorders had substantial legal
uses as well as illegal ones and that it was not Sony’s responsibility to attempt to enforce only legal uses. This
defense ultimately failed, but before Napster could be fully prosecuted, it went bankrupt.
A key difference between the Sony Betamax case and similar lawsuits brought against Napster and other file
sharing software application makers, is that Sony’s Betamax equipment is a consumer appliance residing in the
consumer’s home. Whereas file sharing applications are connected to an online network [internet] that distributes
files globally.6
The new P2P file sharing applications have no central server or point of control. The software coordinates
users across the entire internet by listening for their presence through a special signature in their communication
packets. Hence, the manufacturers of the P2P file sharing applications claim they are simply supplying a “dumb
pipe through which other people act.” 7
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Conclusion:
The primary difference between simply downloading music and movies files from the internet and using
one of the P2P file sharing applications involves “personal use”. We’re really talking about product distribution.
When you purchase a CD to copy or “burn” music or movie files, you are actually compensating the record label
and musician as a percentage of the cost of the CD is paid to the recording companies. Is this an equitable method
of compensation? Maybe not, but this method attempts to recoup lost revenue by the record labels. To help identify
the differences, we need to have a better understanding of what P2P file sharing applications are and what they do.
The definition of Peer-to-Peer file sharing application is any software application that transforms a personal
computer into a server that distributes data simultaneously to other computers. Although this definition appears to be
simple and self-explanatory, it is not the “approved” version but has been simplified for our understanding. The full
definition proposed Institute of Electrical and Electronics Engineers (IEEE) is several pages long. 8
While the definition itself is controversial, generally a P2P computer network refers to any network that
does not have fixed clients and servers, but a number of peer nodes that function as both clients and servers to the
other nodes on the network. This model of network arrangement is contrasted with the client-server model.(See
Figure 5 in the Appendix) Any node is able to initiate or complete any supported transaction. Peer nodes may differ
in local configuration, processing speed, network bandwidth, and storage quantity. Put simply, peer-to-peer
computing is the sharing of computer resources and services by direct exchange between systems. Many researchers
are looking into other the practical uses of this technology. 9
The P2P architecture, itself, is not in question. What is a concern, however, is one of the most prevalent
uses of this technology, P2P File Sharing applications used for the distribution of copyrighted content. Morpheus,
KaZaA, Aimster, AudioGalaxy and Gnutella, are examples of the kinds of P2P File Sharing software which can be
used inappropriately to share copyrighted content. Note, that some of these applications are not pure peer-too-peer
architectures, further reinforcing that the issues with File Sharing applications have more to do with risk of abuses,
than in the technology itself. Along with copyright infringement, other concerns of P2P File Sharing applications
include network resource utilization, security, and inappropriate content. For a more in-depth definition of peer-topeer and the various types (hybrid vs. pure) and peer-to-peer’s relationship with distributed networks, please refer to
the endnotes 2.
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Subscription services do exist for downloading movie and music files from the internet. You can download
movies and music or contract with them for $.79 a title to have them burn a CD for you. There are problems with
these subscription services, however. There is not one subscription service that services the entire record label
industry. Each service has one or more contracts with the record labels, but none of them provide the coverage
necessary to be a fully comprehensive service. Some of the available services are:

Pressplay

Listen.com

Rhapsody

Music Net
Additionally, none of the services above employ peer-to-peer file sharing applications to assist in
distribution.
Currently, the Motion Picture Association (M.P.A.A.) and RIAA have responded to this vacuum and the
seemingly impossible task of turning the tide, by suing gross offenders. Instead of using a carrot, they use a stick.
That’s where another huge issue is! How does the movie and music industry sue the users of P2P file sharing
software applications? They can’t sue the software companies who make peer-to-peer file sharing applications,
because technically they have done nothing illegal. The software is free! The violators of copyright laws and
intellectual property rights are the individuals that use these software applications, and their numbers are huge!!
Conclusion:
Integrating Peer-to-Peer application software with subscription based services should be explored and
encouraged. Recently, Altnet, a unit of Woodland Hills, CA. based Brilliant Digital Entertainment launched a
subscription based web site that includes an interesting incentive program. Altnet is a partner of one of the largest
peer-to-peer file sharing networks, KaZaA. Their incentive program provides for users to accrue “peer points” on a
monthly basis by distributing movies, music, games and other files that have been authorized by copyright owners.
Currently, Altnet indicates that subscribers of their service download approximately 20 million files per month.
Users can win up to $25,000 if they download and then make available authorized files to other subscribers. This
process encourages users to replace their KaZaA acquired movie, music, and other files with Altnet acquired files
and then reward them. According to Altnet Chief Executive Kevin Bermeister, both Altnet and KaZaA are
committed to changing the behavior of traditional peer-to-peer file sharing users. “The goal is to shift behavior so
dramatically that by the end of next year, most of the downloads on KaZaA are authorized copies.”
10
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It is perplexing that the Recording Industry Association of America’s (RIAA) response to Altnet is
“guarded”. RIAA’s senior vice president of business and legal affairs Matt Oppenheim said, “we think its great
when there are systems out there that respect an artist’s choice over whether or not to distribute their music for
free…. While Altnet does it some of the time, the [KaZaA] system by and large doesn’t do it, and that’s a
problem.”11 While Matt Oppenheim’s statements are true, there are very few other options or alternatives that the
RIAA has themselves provided, yet they continue to criticize and bully consumers. It is time for the RIAA to get off
their pedestal and get down to reality. They are not simply facing legal or technical issues. They are facing cultural
norms that determine the ethical nature of consumer behavior. When they deal with these facts, they stand a good
chance of being successful in the next decade. Otherwise, I believe they may end up in the same condition as the
dinosaurs and more recently “dot bombers”.
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Appendix:
Figure 1
http://www.edisonresearch.com/RecordBuyersIIPress.htm
http://www.edisonresearch.com/RecordBuyersIIPress.htm;; Jun 1, 2002
Figure 2
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http://www.edisonresearch.com/RecordBuyersIIPress.htm
http://www.edisonresearch.com/RecordBuyersIIPress.htm;; Jun 1, 2002
Figure 3
http://www.edisonresearch.com/RecordBuyersIIPress.htm
http://www.edisonresearch.com/RecordBuyersIIPress.htm;; Jun 1, 2002
Figure 4
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http://www.edisonresearch.com/RecordBuyersIIPress.htm
http://www.edisonresearch.com/RecordBuyersIIPress.htm;; Jun 1, 2002
Figure 5
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Traditional LAN/Client-Server
Network
Client Computer
Peer-to-Peer File Sharing
Network
Client Computer/Server
Client Computer Client Computer Client Computer Client Computer
Client Computer/
Server
Client Computer/
Server
Server
Internet
Client Computer/Server
Server
Client Computer/Server
Client Computer
Client Computer/Server
Client Computer Client Computer Client Computer Client Computer
http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=69883
Client Computer/Server
Super Node
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Endnotes:
1
Grossman, Lev. “It’s All Free: Music! Movies! TV Shows! Millions of people download them every day. Is digital
piracy killing the entertainment industry?”. TIME. May 5, 2003. Vol. 161, No. 18. Page 61.
2
Ibid. Page 62.
3
Hanna, Julia. “Peer-to-Peer: Has the Music Stopped?”. Harvard Business School: Working Knowledge. Retrieved
February 3, 2003 from http://hbsworkingknowledge.hbs.edu/pubitem.jhtml?id=3281&sid=1&t=special_reports_cyber2003
4
Healey, Jon. “Song Sharing by iTunes Users Stirs Piracy Concerns”. Los Angeles Times. May 14, 2003.
“KaZaA involved in child porn investigation”, Silicon.com, Retried February 3, 2003 from
5
http://www.silicon.com/news/500022-500001/1/3283.html
6
Healey, Jon. “File-Sharing Networks Relying on VCR Ruling”. Los Angeles Times. Sep 10, 2002.
7
Ibid.
8
“A Definition of Peer-to-Peer Networking for the Classification of Peer-to-Peer Architectures and Applications”,
IEEE Computer Society, Retrieved February 3, 2003 from
http://www.computer.org/proceedings/p2p/1503/15030101.pdf,
9
“Internet2 Peer-to-Peer Working Group”, http://p2p.internet2.edu/ ; “What is peer-to-peer?” Retrieved February 3,
2003, from http://www.peer-to-peerwg.org/whatis/index.html
10
Healey, Jon. “Offering Prizes for Legal File Sharing”. Los Angeles Times. June 2, 2003.
11
Ibid.