Europe Spanks File Swappers

The hunt for teenage geeks who illegally download music has moved across the pond, blokes. Only this time, the culprits are a wee bit older.

Implicated in the latest round of lawsuits are a French schoolteacher in his late 20s, a car dealer, a mechanic, and a chef. All told, 459 civic and criminal complaints have been filed against serial swappers in the U.K., France, and Austria. Mon Dieu!

Behind the spanking is the International Federation of the Phonographic Industry (IFPI), roughly the equivalent of the Recording Industry Association of America (RIAA), which has nailed downloading teenyboppers here in the U.S. The IFPI says its list of targets focuses on "uploaders" -- those who illegally download and then share their ill-gotten files over networks such as Kazaa, eDonkey, and Gnutella. One U.K. swapper apparently collected some 9,000 songs in this manner.

I can appreciate the industry's need to protect copyright laws. But I've never believed prosecuting kids, or even frivolous adults, was the way to go, especially when you involve Congress. Yet such draconian times are upon us and so it falls to us, Fools, to figure out what to do about it. And by what to do about it, I mean how to profit from it.

Cold-blooded? No, it's just the way of investing. Sometimes you seek profits by following the way the wind's blowing, and sometimes vice versa. In this case, the suits add a small but probably important long-term tailwind to digital music stores by encouraging legal downloading.

Of course there are always going to be file swappers, but Roxio's (Nasdaq: ROXI  ) Napster, RealNetworks' (Nasdaq: RNWK  ) RealPlayer music store, and market leader iTunes from Apple Computer (Nasdaq: AAPL  ) would benefit from any uptick in legal downloads, with iTunes probably seeing the lion's share of gains overseas. Microsoft (Nasdaq: MSFT  ) and Loudeye (Nasdaq: LOUD  ) could also benefit, seeing that they're producing virtual music stores for new entrantsAT&TWireless (NYSE: AWE  ) and Wal-Mart (NYSE: WMT  ) . And then there's Sir Richard Branson's Virgin Group, which hopes to rock the digital music world while taking tourists to space. If you're an investor in any of them, yesterday's lawsuits may just be, um, music to your ears.

For more rhythmic Foolishness:

  • iTunes plays a key role in Apple's future, but does the promise support the firm's outrageous stock valuation? Check out both arguments and vote.
  • Fellow Fool Rick Munarriz makes a case for why Napster rocks.
  • How about some fries with those downloads?

What do you think? Should kids be prosecuted for illegally downloading music? Should digital music stores like Apple's iTunes lower prices so teens can afford all the music they want? Debate all this and more at the Music & Musicians discussion board. Only at Fool.com.

Fool contributor TimBeyers digs his iTunes but prefers listening to radio over the Net to downloading music. Who needs satellite radio anyway? Pffft. Tim has no ownership interest in any of the companies mentioned, and you can view his Fool profile and stock holdings here.


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