New haven for free music: Canada

The head of Nettwerk, a record label based in Vancouver that represents more than 40 artists including Ms. McLachlan and Barenaked Ladies, says the judge is "completely out to lunch" on this issue.

"He has basically said that anything you've put up in a file-sharing system - it doesn't matter whether it's music, books, movies, it can be any copyrightable material - if people want to take it from your computer that's perfectly fine, because that's private use," says Terry McBride, CEO of Nettwerk. "But the problem is it's not private use."

Mr. McBride blames file-swapping for driving the global music business into recession.

Indeed, the British Phonographic Industry (BPI), Britain's record-industry trade association, released a study last week saying that while nondownloaders' spending on music last year was flat, downloaders spent 32 percent less on albums and 59 percent less on singles than the year before.

According to IFPI, global sales of recorded music fell 7 percent in 2002, and while last year's sales figures aren't available it expects similar results.

Ren Bucholz of the Electronic Frontier Foundation, a consumer advocacy group based in Saf Francisco, doesn't buy such arguments.

"It's always been a red herring for the recording industry to say that file-sharing was responsible for the huge downturn in their sales," he says. "There's lots of other reasons that are much more believable," adding that DVDs, console games, and movies all compete for the same entertainment dollar.

A study released this week by two professors, from Harvard University and the University of North Carolina, says that file-sharing doesn't hurt record sales and in some instances it actually increases them.

Mr. Bucholz calls Canada's court decision "amazingly good news" on an international level.

"If this decision holds it means we have a highly industrialized nation with pretty good broadband penetration that has declared that having songs in your shared folder isn't illegal," he says.

Bucholz says Canada's decision won't legalize file-sharing in the US, even if someone downloads from a Canadian server. "Users in the US will still have to abide by US law," he says.

Yet US law has yet to be fully clarified. While file-sharing in the US is considered illegal, US judges have not yet ruled definitively on the issue. Most of the Recording Industry of America's nearly 2,000 lawsuits have either been settled out of court or have not yet made it to court because Internet service providers (ISPs) refuse to release the identity of their customers who have been sued, citing privacy rights. A US appeals court ruled in December that the industry can't force ISPs to turn over the identities of file-swappers unless the ISPs are formally sued.

In Canada, the music industry's battle to crack down on pirated music is just background noise for many who embrace file-sharing programs.

Mimi Lee, waiting with a friend outside a Vancouver record store, says she's downloaded 10,000 music and videos from the Internet and file-sharing services in the past six years. "I've always thought of it [as] being illegal," Ms. Lee admits. "I'm surprised that the government [made that decision] but for us we really don't care - we still do it."

Such ambivalence has also entered the corporate world, where employees use work computers with fast broadband connections to beef up their online music collection. A study last year by Ottawa's Assetmetrix found file- swapping software installed on company computers in 77 percent of 560 corporations surveyed. Some companies had these programs on as many as 58 percent of their PCs.

Bryan Hsu, a salesman for one retail electronics chain, says customers do ask about the legality of downloading music, but it hasn't dampened sales.

He personally doesn't see any problem copying music files off the Internet - he has 1,000 tunes on his home computer - and applauds the latest news.

"It's good," he says. "At least we can still find something for free."

• Elizabeth Armstrong contributed to this report from Boston.

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