The following is a paper I wrote for my Legal Issues for the Musician class. In it I talk a bit about BitTorrent and bootlegs. I then propose a possible business model for making these things lucrative.
I got an A+ on it. Hope you like it as much as my Legal Issues professor did.
BitTorrent and bootlegs are two of the most controversial aspects of the debate over copyright. A lot of rhetoric gets tossed around about these two subjects from all sides of this debate. Should they be cut out? Banned? Or should they be incorporated into a new business model, bringing the music industry and copyright into the digital age? It is a question worth asking, and, deceptively, one with no easy answer. Using journal papers and articles, and my own experience as an ex-trader and now torrenter of bootlegs (which are not the same as pirates and counterfeits), I hope to attempt to provide one perspective of this question, a potential answer, and one possible idea of how these can be incorporated into a potential business model.
“Peer-to-Peer (P2P) is the most emerging Internet-based technology deployed in the last decade. From 2002 to 2007, P2P largely dominated the Internet traffic with a share up to about 60%.”(Varvello, Steiner & Laevens, 2011) P2P has dominated talks about copyright for a very long time, now. Especially in the music industry, P2P is at the forefront of debates on copyright law. “File-sharing is by far the dominant P2P application, and BitTorrent the most popular P2P protocol. The BitTorrent file-sharing network currently counts millions of users located world-wide that share hundreds of thousands of files on a daily basis.”(Varvello, Steiner & Laevens, 2011) BitTorrent is at the forefront of all of it, with BitTorrent sites being the most targeted form of file-sharing by ISPs and record labels and even governments. BitTorrent is perhaps one of the biggest controversies of the internet these days.
But what is BitTorrent, exactly? At its most basic, BitTorrent is a file-distribution protocol.(“Beginner’s guide,”) It works by allowing users to join a swarm of hosts, known as “seeders”. The downloader is known as a “leecher”, but while they’re “leeching” a torrent (the file or set of files they’re leeching), they are also sharing the parts of the file they’ve already downloaded. Once the torrent has been fully downloaded, if the leecher leaves the torrent file in their client, they become part of the swarm of seeders, sharing the torrent with other leechers who might want it.(Hintz) Many private torrent sites enforce a “share ratio”; that is, they expect members to “share the wealth” by seeding what they leech and uploading to the site any files (music, videos, books, other audio files, etc) that are not already on the site, or, if the torrent is already on the site, then higher-quality versions if available.(“Share ratio,” 2011) Someone who wants to become part of the BitTorrent scene has to download and install a BitTorrent client on their computer. The client is what allows them to connect to the swarm and download the files. Peers communicate via a connection known as a “tracker”, which is something like the HTTP protocol; however, instead of forcing communication between websites, it drives communication between seeders and leechers of a particular torrent. Different sites use different trackers, and trackers don’t all look alike, but they typically follow the formula of a regular website address (http://somewebaddress:portnumber/announce; udp, https, and other protocols are also used).(Pelo)
BitTorrent invites controversy because it is filesharing, and a very large portion of that filesharing is not legal. In fact, two separate statistical studies, one done by Princeton(Felton, 2010) and one done by the University of Ballarat(Cheng, 2010), found that 99% and 99.7% (respectively) of BitTorrent activity infringes upon current Copyright laws. Most torrent sites allow the torrenting of officially released material, without any kind of payment to the labels, artists, studios, directors, and everyone else who invested into the creation, production, and release of the particular work. According to the Princeton study, the breakdown of what’s torrented is as follows:
- 46% movies and shows (non-pornographic)
- 14% games and software
- 14% pornography
- 10% music
- 1% books and guides
- 1% images
- 14% could not classify
Statistics on what percentage of music torrents are official releases and what percentage are bootlegs are not readily available for an overall sample, but I was able to find the statistics for one private torrent tracker, What.CD. Between 2007 and 2012, there were 1,392,138 music torrents uploaded to the site. Of that, 15,856 were bootlegs, which is about 1.139% of all the music uploads on the site.(irredentia, 2012)
Bootlegging is an interesting case, however. It’s different from pirating in that it does not involve official releases, and, in non-commercial cases, no one anywhere is making, or losing, money on the sharing of these torrents. In the European Journal of Law and Economics, back in 2001, Aireza Jay Naghavi and Günther G. Schulze submitted a paper called “Bootlegging in the Music Industry: A Note”. According to the abstract, the paper’s goal was to analyze the “bootlegging of music, i.e. the unauthorized recording and distribution of previously unreleased music (e.g. a live concert). In particular, we investigate whether, and if so, how this illegal activity may hurt bands and record companies.”(Naghavi & Schulze, 2001) The term “bootlegging” is not originally a musical term. It actually hails back to alcohol prohibition in the US. One way people would smuggle illegal alcohol across the country was to carry a flask in the leg of one’s boot. It evolved over the years, and eventually, in the context of music in the modern day, it refers to “the unauthorized recording and distribution of previously unreleased music.”(Naghavi & Schulze, 2001)
As described in the abstract, the point of the paper was to determine what effect, if any, bootlegs had on the music industry. To do this, the authors of the paper needed information on the quality, prices, and distribution channels of the bootlegs. First they gathered information about the quality. They identified live audience recordings as having the lowest quality because they generally pick up ambient noise, specifically the audience, feedback, and so on. Bootlegs of studio sessions tend to be better quality because there’s no audience. FM radio broadcasts tend to be higher quality because they are recordings of professionally-done mixes. And finally, soundboard recordings of live shows are generally the highest quality of all bootlegs, because audience members plug directly into the mixing console, avoiding the unwanted ambient noise. The authors ultimately determined that, with a few rare soundboard exceptions, bootlegs were generally of lower quality than official releases.
They next gathered information about prices, and found that bootlegs were generally more overpriced than official releases, meaning free distribution of bootlegs is generally preferred by traders. The authors then looked at law enforcement, noting how bootlegs had been made equivalent to pirates and counterfeits within the copyright law, with penalties including up to five years in prison and a $250,000 fine.
Finally, the paper looked at the welfare implications of bootlegging, starting with bands’ attitudes towards it. The attitudes are varied. Some bands and artists, like Bob Dylan, chose to directly fight it by releasing “official bootlegs” (like Dylan’s “The Basement Tapes” and Frank Zappa’s “Beat the Boots”). Grateful Dead, Phish, and other such bands decided to simply allow their audience to record their shows, with the caveat that the recordings would not be distributed for profit. The paper then looked at the role copyright itself could play in the pricing of commercial bootlegs, and suggested that the high prices of bootlegs could in part be caused by the strict punishments for bootlegging. And yes, prices for bootlegs are high. For example; the cost of Led Zeppelin’s 3-CD set How the West Was Won is currently $21.07 on Amazon.(Amazon.com) On the other hand, a 3-CD unofficial commercial bootleg release of Led Zeppelin’s show on June 25, 1972 at the LA Forum (the first of two shows used to create the “How the West was Won” set) sells on Fisheads for $85; and this is an audience recording, and not a very good one, at that.(Fisheads, 2012)
So the paper asked the question “do bootlegs crowd out or increase legitimate sales?”(Naghavi & Schulze, 2001) The researchers had already determined that bootlegs are generally lower quality. They had already shown that the prices for commercial bootlegs are quite high. “The overall picture is clear: commercially bootlegged CDs are considerably more expensive and have a worse sound quality than officially released CDs. This combination makes bootlegs collectors’ items rather than substitutes for legitimate CDs. This is in stark contrast to pirated CDs which are always substantially cheaper than the legitimate CDs but have the same quality.”(Naghavi & Schulze, 2001) In other words, no, commercial bootlegs don’t crowd out official releases because, when given the option, most people will choose the official release; official releases are cheaper and nearly always of better/higher quality.
The paper then proposed the suggestion that bootlegs could actually benefit the bands and artists through “positive network externalities”. “Those would occur if the number of records of a certain band in circulation, both legal and illegal, determine how renown a band is, and thereby reduce information costs and attract new customers for legitimate CDs.”(Naghavi & Schulze, 2001) The researchers noted that such network externalities would actually be quite small, because bootlegs are pretty much collected only by people who are already hardcore fans. The researchers concluded the paper by suggesting that the real threat to band and artists is in pirates and counterfeits, and bootlegs only threaten a band’s or artist’s right to decide what to release and what not to release.
One thing is very clear in all of this: neither torrenting nor bootlegs are going away any time soon. The music industry has tried to get rid of them, but failed. Torrenting sites have been described as “hydras”, because once you take one down, a dozen new ones go up in its place. This is what happened when Oink was taken down, and when Demonoid was taken down. Commercial bootlegging operations are just as hard to take down because they usually spring up in countries with no or unenforced(/unenforceable) copyright laws, making them near impossible to take down without international copyright agreements, which don’t seem to be coming down the pipeline anytime soon. So what can be done about them?
I think it may be prudent to find a way to incorporate bootlegs and torrenting into a business model that can only benefit the band or artist. My idea is this: for a small monthly or slightly larger yearly fee, users would have access to a torrent site that allows them to leech and seed authorized bootlegs of a particular band or artist. A band could professionally record all of their live shows, rehearsals, and studio sessions, both audio and video, and upload these as torrents to the site in numerous different audio and video formats. Users could then leech these from the server, and then take over as seeders to share them with other fans of the band. As extra income, the band could sell cases for the music, at, say $5 per disc, with discounts for box sets of more than, say, 4 discs, or just orders of cases for 4 or more discs. The cases would include very basic artwork, including a picture, date, venue, address, time of show/rehearsal/session, and a track listing. The band could also sell live versions of their albums in stores, though that would mean playing every single song the band has ever released live at least once. The torrented files would be DRM free, since the fans are paying for them through the subscription fee, so once the torrent is downloaded, the music belongs to the leecher outright. The quality of the torrents would also have to be high, so at least semi-professional. The subscription fee should be low enough to be attractive, but high enough to cover the costs of maintaining the server, the costs of the professional recording/mixing, and to make a profit, while keeping in mind that sale of the cases and live versions of the studio albums, as well as some portion of ticket sales and merchandise, could supplement this. In order to ensure seeding, share ratios could be enforced.
But even if this idea isn’t used, it would be better to incorporate bootlegs and torrenting than try to fight them outright, as fighting them can only drain resources and potentially alienate fans, while incorporating them could, in fact, potentially increase profits and bring in more fans. Copyright needs to evolve to incorporate the digital age. This digital age includes a much easier platform for sharing official and unofficial releases, and that doesn’t seem to be stopping any time soon. Taking this new form of distribution into account, and incorporating it in to a usable business model, is probably the best way to move forward into the new digital age.
Sources Directly Used:
Amazon.com. (n.d.). How the west was won[live]. Retrieved from http://www.amazon.com/How-West-Was-Won-Zeppelin/dp/B00008OWZC/ref=pd_sim_m_1
Beginner’s guide. (n.d.). Retrieved from http://www.bittorrent.com/help/guides/beginners-guide
Cheng, J. (2010, July 23). Only 0.3% of files on BitTorrent confirmed to be legal. Retrieved from http://arstechnica.com/tech-policy/2010/07/only-03-of-files-on-bit-torrent-confirmed-to-be-legal/
Felton, E. (2010, January 29). Census of files available via BitTorrent . Retrieved from https://freedom-to-tinker.com/blog/felten/census-files-available-bittorrent/
Fisheads. (2012, October 31). Cd catalog 2012 5 happy halloween & more!! [Electronic mailing list message].
Hintz, M. (n.d.). Seeder vs. leecher. Retrieved from http://www.ehow.com/facts_7446192_seeder-vs_-leecher.html
irredentia. (2012, November 01). [stats] a graphic superfluity of what.cd statistics, october 2012. stats and more stats! 5ive years anniversary edition. [Online forum comment]. Retrieved from (private site)
Naghavi, A. J., & Schulze, G. G. (2001). Bootlegging in the music industry: a note. European Journal of Law and Economics, 12(1), 57-72.
Share ratio. (2011, September 24). Retrieved from http://p2pfoundation.net/Share_Ratio
Pelo. (n.d.). How to make a torrent. Retrieved from http://www.utorrent.com/help/guides/make-a-torrent
Varvello, M., Steiner, M., & Laevens, K. (2011). Understanding BitTorrent: a Reality Check from the ISP’s perspective. The International Journal of Computer and Telecommunications Networking, 56(3), 1054–1065. doi: http://dx.doi.org/10.1016/j.comnet.2011.10.031
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