Lawsuits Loom for European Internet Pirates

After attempting to bring those who illegally download and swap music on the Internet into the legitimate fold by offering the country's first pay-per-song Web site, the German music industry has had enough and has announced that there will be no more mister nice record business. The lawsuits are about to start flying -- U.S.-style.

The German music industry, backed by the weight of the International Federation of the Phonographic Industry (IFPI), is set to start pursuing the Internet pirates on home soil. News broke on Wednesday that 247 lawsuits have been filed in Germany, Italy, Denmark and Canada, and more are expected to follow in other countries.

According to industry sources, the lawsuits target people who the record companies say have offered hundreds or even thousands of music files for others to download online through "peer-to-peer" networks. If found guilty, the pirates could be fined thousands of euros.

Strategy change leads to legal action

The German record industry used its annual press conference on Tuesday to call time on all illegal "downloaders" who have failed to take the last chance of a minimum payment per track arrangement that was offered recently. By ignoring Germany's legal "Phonoline" site, the pirates have unwittingly unleashed a "strategy change" that could lead to the widest legal sweep in the history of the Internet in Europe.

The clampdown will focus primarily on Germany, Italy, Denmark and Canada due to the rampant levels of Internet piracy which have contributed to double-digit falls in music sales in each country's industry. Associations in France, Britain and Sweden said they also supported the action.

No longer just profit makers in the frame

While initial legal actions were primarily aimed at pirates who were using the Internet to make a profit from bootleg recordings, the hunt will now turn to anyone who is seen to be depriving the music industry of much-needed money. That means anyone swapping or downloading songs illegally from the Internet, even for personal use, will be liable for punishment.

First though, the new clampdown will target people who make music available for free swaps on the Internet. The German music industry is aware of the mistakes made in the wide-raging U.S. sweep that attempted to prosecute even those who had music files on their hard drives. That plan resulted in the Recording Industry Association of America (RIAA) initiating over 2,000 legal actions.

Huge profit and job losses

The new hardline approach will aim to stop the slide in profits which saw Internet piracy contribute to the 20 percent dip in the German music industry's turnover in 2003. Global losses due to Internet piracy are estimated at around $2.4 billion (€1.96 billion) per year, which have contributed to a five-year decline in music sales.

As a result, music companies, including Universal Music, Warner and EMI, have cut thousands of jobs to offset the sales decline. In the latest round of cost-cutting, the industry's five leading companies are seeking a further $1.3 billion to $1.4 billion in savings over the next three years.

Determined industry fights back

IFPI head Jay Berman told the Financial Times: "We will not stand by while thousands of people involved in the creation of music see their careers and livelihoods destroyed. The message is people are at real risk of being sued or prosecuted if they continue to rip off those who make music."

Johan Schluter, head of the Danish Recording Industry Association, blamed Internet piracy for CD sales falling 50 percent in four years. "People are losing their jobs; record stores are closing down; and artists find it increasingly difficult to get their music released," he said.