On the Logic of Suing One's Customers and the Dilemma of Infringement-Based Business Models
39 Pages Posted: 8 Mar 2005
Before mid-2003, the recording industry's legal attack against peer-to-peer (P2P) systems was limited to the purveyors of P2P. End users were left untouched, the conventional wisdom being that it's not good business to sue one's own customers. Seven thousand lawsuits against P2P users later, that conventional wisdom appears wrong.
This essay looks at the conflicting evidence and concludes that the most reasonable interpretation of the data is that suing end users has meaningfully dampened file sharing among people who can afford to buy music; that suing these end-users may be a financially self-sustaining activity; and that, if left unchecked, unauthorized P2P file sharing would increasingly substitute for legitimate sales. The de facto price discrimination produced by filing sharing has triggered official price discrimination through a combination of spoofing, lawsuits, differently priced download services, and discounts for university students. But this new balance is precarious and the problem of infringement-based business models remains. The most reasonable way to address that problem while preserving P2P technology is to fully restore knowledge and intent as components of third party liability in copyright. This requires revision of the Sony test, revision already started by the lower courts in Napster and Aimster.
Keywords: Internet, Intellectual Property, Copyright
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Regime Change in Intellectual Property: Superseding the Law of the State with the 'Law' of the Firm
A Critique of the Reasonable Expecations Doctrine
By Nancy S. Kim
DRM Interoperability and Intellectual Property Policy in Europe
By Mikko Valimaki and Ville Oksanen
The Place of Creativity in Copyright Law
Adhesion Contracts and the Twenty First Century Consumer
By Leon Trakman
Contract as Commodity: A Nonfiction Approach
Copyright Law and the Myth of Objectivity: The Idea-Expression Dichotomy and the Inevitability of Artistic Value Judgments
By Amy Cohen
When Does a Work Infringe the Derivative Works Right of a Copyright Owner?
By Amy Cohen
Copyright Law in the Digital Environment: Private Ordering and the Regulation of Digital Works