AOL Fiddles While Pirates Raid the Net

In what is being hailed as a landmark decision, a Bavarian state court ruled earlier this week that AOL Germany is responsible for allowing users to swap pirated music files via its online service. The court’s action may finally give the music industry a powerful weapon against Internet piracy.

The case originated in 1998, when Hit Box Software sued after discovering that its digital musical files were being exchanged over the AOL service.

At issue were three versions of pop hits, including “Get Down” by the Backstreet Boys. Hit Box says the tracks would normally be sold on CDs that cost about $15 (US$), but they were downloaded for free more than 1,000 times on AOL.

While Hit Box demanded about $50,000 in damages, the court has not yet issued a ruling on the size of the award.

AOL Technologically Impotent?

AOL Germany said it would appeal the ruling, arguing that it lacks the technology to thoroughly monitor its service’s huge flow of data. It has already closed down the forum where the music was illegally traded.

AOL has been charged with being a conduit for Internet piracy before. Last month, the rights of musicians and artists were trod upon when America Online’s Nullsoft music division released software designed to facilitate intellectual property theft.

The “Gnutella” software, which was developed by the same group that created the popular Winamp MP3 player, lets users trade music via the Internet by tapping into a network of hard drives.

According to published reports, AOL immediately canceled the project after recognizing the software’s full implications, but Gnutella lives on.

Pirates Abound

Before Gnutella reared its ugly head, music lovers were already using Napster — another controversial program — for the same purpose. The success of Napster inspired the Recording Industry Association of America (RIAA) to file a lawsuit on behalf of 18 record companies, accusing the startup of being a hotbed of music piracy.

As of this moment, however, the Napster site is also still up and running.

While AOL’s inaction seems less reprehensible than more overt forms of piracy, the company may have unleashed another Godzilla capable of trampling the intellectual rights of artists and musicians.

Other Pirate-Friendly Sites

Lest I be accused of singling out one villain in this drama, it should be noted that AOL is not the only company that is being used by thieves to circumvent copyright laws.

On Wednesday, the Software & Information Industry Association (SIIA) warned that the piracy of software products in online auctions has reached epidemic proportions and could well lead to legal action against some leading auction sites.

The SIIA found that 91 percent of online auctions of software products it surveyed in a four-day period from March 31st to April 3rd were offering pirated goods. It issued a scathing indictment of many online auction sites, including eBay, Yahoo! and Excite.

A Brazen Cop-Out

What rankles me the most is AOL’s lame excuse for not interfering with the cyber-thieves. The company’s claim that it does not have the technical capability to track or block such illegal transactions is ludicrous.

AOL is the same company that touts its technological savvy — proudly advertising its capability to follow customers so closely it can pepper them with e-commerce offerings honed to their individual tastes on a minute-to-minute basis.

It is interesting to note that in the SIIA’s recent survey of online piracy, another online giant — Amazon — emerged pure as the driven snow, having hosted only one apparent auction of pirated goods among the 1,300 that SIIA discovered. Amazon said that it has taken proactive steps to review auction listings within 24 hours of posting to see if they offer pirated goods.

Apparently, Amazon is far more technologically advanced than AOL and the other Internet giants that provide safe harbors for cyber-pirates. Or, perhaps AOL’s excuse is simply an excuse.

AOL has spewed a lot of platitudes about leadership and the future of the Web, but it seems content to let the inmates run the asylum when it comes to piracy. Instead of devoting all of its energy to conquering the universe, the company should lead the crusade for Internet law and order.