Big win for record industry in first downloading trial

The recording industry Thursday won the largest judgment so far against consumers who illegally download music over the Internet when a federal jury ordered a 30-year-old Minnesota woman to pay $222,000 for copyright infringement.

The victory could embolden the industry in its four-year legal campaign against piracy at a time when illegal sharing of music online is dramatically reducing music sales.

The decision by the jury in a federal court in Duluth, Minn., against Jammie Thomas, an Indian reservation employee, is the first case of its type to come to trial.

The Record Industry Association of America, which represents the six music labels that brought the case, has brought 26,000 lawsuits against individuals for copying or letting others copy songs online.

More than 10,000 cases have been settled, with defendants typically paying less than $5,000.

Despite the years of litigation, illegal downloads are 10 times as common as legal digital sales and are still growing at 60 percent a year, said Russ Crupnick of market researcher NPD Group.

"The landscape is still very much what it was three or four years ago," said Eric Garland, chief executive of the piracy-tracking company BigChampagne. "It's still a one-horse race, and piracy is the lead horse."

The record association said the contest would be more lopsided if it stopped suing.

Thomas, a mother of two, testified this week she had not used the Kazaa online service for swapping music with strangers. But evidence showed that a Kazaa user named "tereastarr" had offered up 1,700 songs and that Thomas went by the same name on other online sites.

In addition, her Internet service provider said it had assigned Thomas the numeric Internet address that in 2005 had connected to Kazaa.

Thomas denied wrongdoing and testified she didn't have a Kazaa account.

Copyright law sets a range of $750 to $30,000 per infringement for awarding damages in such cases, or up to $150,000 if the violation was "willful." Jurors ruled that Thomas' infringement was willful but they awarded damages of $9,250 for each of the 24 targeted songs.

"In tears"

After the verdict, Thomas' attorney, Brian Toder, told The Associated Press: "She was in tears. She's devastated. This is a girl that lives from paycheck to paycheck, and now all of a sudden she could get a quarter of her paycheck garnished for the rest of her life."

Toder said the plaintiff's attorney fees are automatically awarded in such judgments under copyright law, meaning Thomas could actually owe as much as a half-million dollars. However, he said he suspects the record companies "will probably be people we can deal with."

Richard Gabriel, lead attorney for the six companies, said no decision had been made about what they would do, if anything, to pursue collection.

The record labels that sued Thomas were Arista Records, Capitol Records, Interscope Records, Sony BMG, UMG Recordings and Warner Bros. Records.

Music-industry executives privately acknowledged the Thomas verdict would do nothing to stem the tide of stealing. If anything, they said, such cases are a continuing distraction for the real task, which is to increase legal sales, especially online.

"You can't stomp it out. People are going to get it one way or another," said a senior executive at a major label who said he would be fired if his name were printed.

Losing battle

The industry is trying to preserve the sale of music in forms consumers are increasingly rejecting, such as CDs and digital tracks that come with restrictions on how many times they can be copied or on which devices they can be played.

"Eventually we will all have to go MP3," said the executive of the most common digital-music format.

MP3s can be played on any device, and no software restricts it from being copied.

Universal Music Group and EMI Group began selling MP3 versions of their songs this year, and the others major labels are expected to follow by the end of 2008.

"I see more and more legal services these days," said Karlheinz Brandenburg, one of the principal engineers who developed the MP3 format at a German consortium, the Fraunhofer Institute. "As the offerings get more active, the piracy will come down."

More online deals

In addition to selling MP3s and protected songs through Apple's iTunes electronic store, the labels are making more deals to share advertising revenue with Web sites that feature their songs.

But the lawsuits, experts said, aren't changing the marketplace.

"It's not helping their cause. It's like prosecuting marijuana users," said Bob Lefsetz, who writes a music-industry newsletter.

Material from The Associated Press was included in this report.