By Steven Levy, Newsweek

Joyce Mullen's new car has a CD player, so this year the 53-year-old administrative assistant for Lucent began purchasing discs, most recently a Cher collection. But her relationship with the music industry changed last Monday, when the phone rang in the house she shares with her family on a leafy street in Methuen, Mass. It was a reporter asking how it felt to be sued by the giant corporations who sell the CDs she'd been buying.

The file-sharing boom, in which 60 million Americans have grabbed free music on the Net, involves epochal clashes. Status quo business models versus risky progress. Copyright hawks against public-domain geeks. What the Mullens can't figure out, like many of their fellow defendants, is how they wound up on the front lines. Why would an industry sue its customers? And why them?

THE SAME AS SHOPLIFTING?
"We're doing it to get our message out," says RIAA president Cary Sherman. And though most song swappers still don't buy Sherman's claim that importing a free song is morally the same as shoplifting a disc from a record store (legally, downloading is a no-no), he's certainly got their attention. Though the topic of downloading pales in comparison with the usual admonitory dinner conversations--smoking, drinking, drugs, sex and schoolyard shootings--suddenly parents are grilling Jason and Tiffany about MP3s and P2P. All to the delight of music-industry strategists.

Will the effort actually turn the tide against file sharing? After the RIAA announced its intention to sue consumers, activity indeed dipped this summer. And last week a NEWSWEEK Poll found that 54 percent of respondents say the crackdown will make them less likely to continue. But don't count out song swapping just yet. The summer downturn may well have been due to, well, summer, when campuses are empty and even computer nerds sometimes find reasons to go outdoors. After Labor Day "there was a dramatic uptick," says Eric Garland, CEO of BigChampagne, a company that tracks file sharing. The numbers were as high as ever, and there was no significant drop-off after news of the lawsuits last week.

Even if the RIAA makes good on its promise to sue "thousands" more people, they can't sue everybody. "Every time I log on to Kazaa it says there are a million users online with me. The odds are in my favor," says one 19-year-old student at the University of South Carolina. If infringers don't want to play the odds, they can virtually guarantee the RIAA can't finger them: simply turn off the "sharing" part of file-sharing software, and you can still download--but the copyright cops can't find you. If Americans do this, the file sharers overseas will pick up the slack. "Even if every last Kazaa user in the U.S. turned off file sharing, there wouldn't be a perceptible difference," says Garland.

In any case, virtually all the file-sharing services are now considering a revamp of their system that would flummox industry gumshoes. "We are preparing a new release with added layers of encryption," says Pablo Soto, the 23-year-old Madrid-based creator of the Blubster service. "We're going to win," says Grokster CEO Wayne Russo. "The technology always wins."

INDUSTRY OVERKILL?
To date, Congress has sided with the music industry. But after last week's lawsuit, some legislators are scrutinizing the RIAA. Minnesota Sen. Norm Coleman, who was once a roadie for Ten Years After, suspects overkill in suing people for up to $150,000 per song. "Does the punishment fit the crime?" he asks. "I think the companies want to make an example of someone. Being an ex-prosecutor, I really worry about that." Coleman wants his own hearings, with a focus on the subpoena process that allows the music industry to force Internet providers to supply customer information without any judicial oversight. Still, the Kazaas of the world have plenty to answer for, as well. They are, after all, profit-making operations with revenues from advertising and software distribution (sometimes including unwanted spyware). As much as they gloss over the fact, their bread and butter lies in enabling people to illegally obtain copyrighted material. Also, a good chunk of the computer industry conveniently turns a blind eye. "If downloading music is illegal, why aren't they stopping the companies who are making the players and the burners? Isn't that like a pipe people are smoking pot out of?" asks Vonnie Bassett, 42, a mother who is one of the RIAA 261.

"It's not hard to do a better job than Kazaa," says Apple CEO Steve Jobs, whose (legal) iTunes Music Store, with 10 million downloads, has proved that people will pay for music online. His success, and well-stocked music-subscription services like Rhapsody, are examples of the "carrot" strategy that many believe is the only way to win back the generation that believes that a fair price for music is zero. Inevitably, new business models will emerge that may shake up the way record labels do business, but eventually wind up with a system that serves the needs of the industry, musicians and the consumer.

Caught in the middle are the poor shlubs snagged in the web of the music industry's education program. "I'm furious because I can't afford this," says defendant Alyson Symons of Los Angeles. "I've got two young children. I'm not dealing with this too well." Even for those who think that they were wrongly identified, taking on billion-dollar corporations is too much to handle. The industry is already considering settlements, supposedly in the $3,000 to $5,000 range. To a wealthy record executive, that's a couple of nights in a luxury suite, but for the working-class families who have to scrape up the cash--or risk financial ruin by defending themselves in court with a possible liability in the millions--facing the music is a serious matter.

And, considering that millions of people are downloading every day, an infuriating one. "I think it's really ridiculous to do this to a 14-year-old," says Courtney Fitzgerald, an honor-roll student who downloaded 800 songs--and now has her family on the line for up to a billion dollars' worth of penalties. "All my friends do it, yet I'm the only one being sued for it." Whether or not you consider Courtney a thief, one thing is certain: she's collateral damage in a file-sharing war that won't end soon.

With Vanessa Juarez in New York, Jason McClure in Boston, Holly Bailey in Washington, D.C., and Elisa Williams in San Francisco

© 2003 Newsweek, Inc.

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