NEW YORK/LONDON The recording industry has won a major fight in its effort to stop illegal music downloading with a U.S. jury decision to impose $222,000 damages against a Minnesota woman who used a Web service to share music.
Although industry commentators are divided over what impact the case will have on stemming illegal downloads globally, the size of the damages is significant -- nearly 80 times higher than the average European settlement figure in such a case.
The jury in the civil case in the U.S. District Court of Minnesota on Thursday found Jammie Thomas infringed copyrighted song recordings, and awarded damages of $9,250 for each of the 24 recordings cited.
The verdict marked the first jury trial in the U.S. industry's drive to combat piracy with lawsuits against an individual.
According to court documents, the record companies sued Thomas in April 2006 after 1,702 music files involving artists such as Green Day, Aerosmith and Guns 'N' Roses were traced to a computer tied to her. A year earlier, investigators had located an individual with the screen name "tereastarr@KaZaA" using the Kazaa file-sharing software program.
"This individual was downloading copyrighted sound recordings from other users of the Kazaa network, and was distributing copyrighted sound recordings stored on her computer to other Kazaa users," the plaintiffs said.
Thomas, in documents, denied the allegations of the complaint "that relate to any allegations that she ever used any (peer-to-peer) network, including Kazaa."
The record companies involved included EMI Group's Capitol Records, Sony BMG Music Entertainment, Arista Records, Interscope Records, Warner Bros Records and UMG Recordings.
According to data from the International Federation of the Phonographic Industry (IFPI), which represents the recording industry, there have been 50,000 cases in 18 countries against illegal filesharers with settlements averaging just over 2,000 euros ($2,822).
The biggest settlement in Europe was 13,000 euros for a case in Denmark. The vast majority of cases never get to court because they are settled before then.
The Thomas case underscores the battle record groups face amid falling CD sales and surging online music growth to stem the level of global piracy via filesharing networks.
Peer-to-peer file sharing is estimated to cost the industry billions of dollars each year in revenues it could have made from CD sales or paid-for downloads.
Figures from ScreenDigest show that physical music revenues in the United States have fallen from around 15.3 billion euros in 2001 to 4.1 billion euros last year. This covers music DVDs, vinyl and minidiscs, but the majority comes from CDs.
Anti-piracy groups have managed to cut the level of illegal downloads in Germany following a particularly concentrated campaign of enforcement. They also applauded a Belgian court's decision earlier this year that Internet service providers did have a legal responsibility to tackle piracy.
However, analysts say the fight is not helped by the surge in illegal filesharing and downloads occurring away from networks by the use of direct emails, instant messaging, Web forums and networks that can hide activity via encrypted data.
"Legal action against an individual is all about setting examples and that is why there is such a ridiculously high rate (of damages) set in this case," said Mark Mulligan, a research director at Jupiter Research.
He added: "Enforcement is very difficult and going to get more difficult."
"We have always made it clear we are reluctant litigators," said IFPI Chairman and Chief Executive John Kennedy.
"We do everything possible to persuade people not to leave themselves exposed to litigation. We educate, we warn, we even try and settle before a case gets to court. We derive no great satisfaction from this but hope it will prove a deterrent to others."
Geoff Taylor, Chief Executive of the British Phonographic Industry said: "This important court ruling serves as a strong reminder to illegal filesharers that digital shoplifting is against the law, is not anonymous and can lead to serious legal consequences."