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LIVE FROM THE HEADLINES

Florida Man Convicted of Music Piracy

Aired August 22, 2003 - 19:20   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

DARYN KAGAN, CNN ANCHOR: Yesterday, a 21-year-old Florida man pleaded guilty to online music piracy, marking the first ever federal criminal prosecution for this crime. Mark Shumaker could get five years in prison and be fined $250,000. The music industry says the conviction sends a strong message to those who steal copyrighted music.
But does it? And what does Thursday's ruling mean for the casual music downloader?

Andy Serwer is here with some of those answers.

Good evening. Thanks for being with us.

ANDY SERWER, CNN CONTRIBUTOR: Good evening, Daryn.

KAGAN: What do you see as the significance of this prosecution?

SERWER: Well, it's pretty serious stuff, what this guy is facing. I think he's going to get sentenced in November. And he is looking at that jail time. I don't think he's ever going to be sent to jail.

I kind of look at this as like a drug dealer kind of thing. He's like a dealer, because this is a guy who was allegedly -- or I guess he acknowledges now.

(CROSSTALK)

SERWER: He acknowledges that he was distributing music. So he's like the big fish. He's not a casual user, to kind of keep the drug metaphor going. The question is, what happens to the little fishes?

KAGAN: Yes, what about all the little fishes swimming around the Internet out there, either sharing music files or plucking a little music here, a little there?

SERWER: Well, I think they've got to be concerned too, Daryn. Again, like the drug metaphor, if you're caught with a little bit of drugs, you're caught.

There are thousands of subpoenas out there right now where people have been subpoenaed for downloading music. Mostly, again, they're going after people who are really enhancing and helping this business and sharing music not just one person. But they have done that. They've gone after people like that. And, you know, you have to wonder if this is really the solution for the record industry.

KAGAN: Well, and if you just even look what's happening, you're talking about, this is what the Justice Department is focusing on. These are the same guys who are trying to fight terrorism and corporate crime. And copyright infringement is a significant problem, but you wonder, should the federal government's energy be focused on the person that is at home with their computer trying to get some music

(CROSSTALK)

SERWER: Yes.

They have this intellectual property division in the Justice Department. Consider, there's all these young lawyers down there trying to earn their stripes. They've got to do this. They've got to prosecute these cases.

KAGAN: But doesn't this miss the bigger picture here, that the music industry, up to this point, has failed to figure out how to capitalize on this kind of technology. Just as every other technology that has come along, they're always a little bit slow to catch up with. How do they advantage of it and capitalize on it?

SERWER: Well, I think that's a legitimate point. If they expended as much energy trying to figure out how to sell music online as they did trying to catch pirates, maybe they wouldn't have this problem. They have the C.D. packaging that's so difficult to get into a C.D.

They spend a lot of time protecting their business. What about trying to figure out how to sell music online? We see iTunes. Apple System is there now. Buy.com is there as well. We're seeing these steps. I think, though, Daryn, they've really got to think about pricing, really think maybe about lowering the price of music, so that the gap between free music and what it costs to buy music is decreased.

KAGAN: Now, you know, in any business, when someone suggests you need to drop your price significantly, that's the last thing those music executives want to hear.

SERWER: Well, that's true, especially because these people have made so much money. These people live like poshes, these record executives, in these huge homes.

On the other hand, they should think about it this way. The people that are stealing the music actually lower their prices for them already, because they're making less money. Business is in a big slump. A lot of that has to do with piracy. If they cut prices, maybe people would come in and buy it. Also, like you've said, they've got to figure out how to sell it online.

KAGAN: Yes. And, meanwhile, downloaders, beware, but because the federal government could be coming after you.

SERWER: They are.

KAGAN: Andy, thank you.

SERWER: OK, Daryn.

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