A Brief History of File-sharing & Peer-to-Peer Networks *

A Brief History of File-sharing & Peer-to-Peer Networks * I. Introduction To File-Sharing & Audio-Files The primary business operation of record labels, such as Universal Music Group or Sony Music Entertainment, includes producing, marketing, and distributing music. Other operations outside of the immediate value chain consist of identifying new talent, managing contracts with music artists and their agents, and seeking intellectual property protection and licensing for music released under their label. These business activities represent the bulk of responsibilities that record labels must fulfill in their contracts with recording artists. For musicians seeking name recognition and success in the industry, it was once considered essential to be signed to a record label; however, with the advent of new web-based technology and services offering free media sharing, social networking, and other means for self-promotion, many recording artists are able to achieve success without securing an exclusive recording contract with a record label. In recent years, shifting technology in the music industry has negatively impacted CD-based record sales as more and more consumers move to digital downloads as their preferred method of music purchase. However, the explanation behind the overall loss in revenue from recorded music has much to do with the continued popularity of illegal file downloading. The Internet supports trafficking of audio computer files in legitimate ways, such as record labels routinely selling and providing samples of their artists' work through itunes, Amazon, or their own websites. With legal forms of downloading, record companies still receive a percentage of the royalties, though the download providers (online music stores) also retain a percentage of the price paid for each download sold. Many new and unsigned artists use their personal websites to distribute their audio materials to the public; however, by most -1 MusicSharing-ARTICLE-02-21-12

accounts, the predominant use of the MP3 audio-file is to traffic illicit audio recordings. This is because typical MP3 files do not contain codes required by the Audio Home and Recording Act of 1992 ( A.H.R.A. ) that identify whether the compressed audio material is copyright protected. 1 (A) P2P Networks & MP3 Audio Files File-sharing is the practice of distributing or providing access to digitally stored files such as computer programs, sound recordings, videos, images, documents and more. File-sharing is often implemented through a peer-to-peer ( P2P ) network, which enables one computer to communicate with another computer, either directly or through a mediating third-party server. When computers connect through a P2P network, users are able to search for and access digital copies of specific files on another connected user s computer. Although there are many different formats of multimedia, the increasing popularity of file-sharing since the late 1990s can be attributed to MP3 audio files. Until recently, the Internet was of little use for the distribution of music because the average music file was too large to download; however, with the development of high-speed internet, a single download of these now smaller MP3 audio files can be transferred quickly and be stored much more efficiently. In addition to the increased speed of file sharing, the superb audio quality of MP3 files surpassed that of most previous formats. While MP3 files are not quite CD quality, most * 2011, 2012 The Jacobson Firm, P.C. This article arose out of research for The ABA Connection Webinar, entitled Seeking Harmony in Music Distribution. Special thanks to our interns for their help on this project, including Ms. Tara Dunigan, Brooklyn Law School 13; Mr. Jason Feingertz, Brooklyn Law School 13; and Ms. Clemence Neulat, our French visiting New York Law Scholar, for their valuable assistance. 1 17 U.S.C. 1001 (1992). -2 MusicSharing-ARTICLE-02-21-12

listeners are unable to hear the slight degradation in quality. There is also no further loss of quality when an MP3 is digitally copied, enabling limitless duplication. Consequently, with the rise of the MP3, an unlimited amount of high quality copies of songs could be reproduced quickly and easily from a single, original digital recording. The demand for these compressed MP3 files spawned the development of many file-sharing programs including Napster in the late 1990s, and continued with the development of newer P2P networks, such as BearShare, Kazaa, Gnutella, and Morpheus. The introduction of P2P file sharing networks has not only spurred the development of a vast array of file sharing programs, file storing programs and other technology, but this innovation has also created a forum for intense litigation over the infringement of copyrighted music. (B) FLAC Audio Files A newer and higher quality sound file has recently emerged called Free Lossless Audio Codec ( FLAC ). FLAC is designed specifically for audio files and is similar to an MP3. While the MP3 format can retain almost all of the quality of a CD, when files are compressed in FLAC format, there is absolutely no loss in quality. Therefore, if the original CD or audio recording is damaged, an exact duplicate can be recovered from a pre-existing FLAC file. FLAC files are typically larger than their MP3 counterparts. However, concerns about file size have been significantly reduced in recent years with the dissemination of inexpensive external hard drives capable of storing large files and the increase in broadband Internet speed. With the expanded development of file sharing, a new wave of programs and file types were established to allow users to view and more efficiently transfer and store music over the Internet, including BitTorrent and Cloud based storage. -3 MusicSharing-ARTICLE-02-21-12

(C) BitTorrent With the wide-spread shut down of P2P networks, a new file sharing system called BitTorrent entered the ever-changing world of file-sharing. BitTorrent is used to transfer data to a user s computer by simultaneously connecting one user to many other users computers. When a user requests a file, data is artificially split into smaller pieces by the program and is downloaded from other users computers. The original file is then reassembled on the downloader s computer. While traditional P2P networks download the requested file from only one machine, BitTorrent systems create a more reliable connection by allowing the user to automatically continue downloading the file from any connected computer even if the original sharing computer shuts down or stops sharing. A torrent file simply downloads a very small file with a.torrent extension, which is freely available on the Internet. A program, such as Vuze, BitComet, or utorrent, allows the user to open these.torrent files and begin the process of downloading and accessing the files the user seeks. (D) The Cloud Cloud sharing and computing is also becoming more relevant with the invention of faster Internet connections and an increase in hard-drive storage capacity. The Cloud is an alternative online hard-drive that permits a user to upload their personal files to their personal Internet Cloud, which becomes available to any user that has access to this digital database via the Internet. Companies such as Amazon, Dropbox, Apple, and Microsoft were among the first to provide Cloud storage. With the increase in ways to store and listen to music, copyright litigation has come to the forefront for music recording companies in the past decade. Recently, Arista Records LLC, -4 MusicSharing-ARTICLE-02-21-12

along with 12 other plaintiff record companies, sued Usenet.com, Inc. ( UCI ) over their service, Usenet. 2 Usenet provided services similar to Cloud computing by allowing users to post messages containing files for others to download. The court held that by doing so UCI actively promoted rampant, illegal file sharing. 3 II. Copyright Infringement Litigation As new file sharing and P2P networks developed, so did new copyright infringement suits for the unauthorized downloading and distribution of copyrighted recorded music over the Internet. To establish a prima facie case of direct copyright infringement, a party must demonstrate: (1) valid ownership of the allegedly infringed material; and (2) that the alleged infringer s copy violates at least one of the exclusive rights granted to the copyright holders. 4 There are several cases that involved copying devices that set the stage for the later P2P copyright litigation. The first case involving duplicating machinery was Sony Corp. v. Universal Studios, Inc., more commonly known as the Betamax case. 5 Sony created the first ever mass-marketed videocassette recorder called the Betamax VCR. The issue presented to the U.S. Supreme Court was whether Sony was liable for secondary copyright infringement for distributing the Betamax VCR machine. The Court held Sony not liable of secondary copyright liability, stating that "the sale of copying equipment... does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes." 6 The Court reasoned that the Betamax was capable of substantial non-infringing uses, namely 2 Arista Records LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124 (S.D.N.Y. 2009). 3 Id. at 132. 4 17 U.S.C. 106, 501(a). 5 464 U.S. 417 (1984). 6 Id. at 418. -5 MusicSharing-ARTICLE-02-21-12

time-shifting. 7 Time-shifting occurs when an individual makes a copy of a complete television show for subsequent viewing. 8 Another pivotal case that set the stage for future P2P copyright infringement litigation was Recording Industry Association of America v. Diamond Multimedia Systems. 9 In Diamond, the Recording Industry Association of America ( R.I.A.A. ) 10 the trade group for both corporate and independent record labels and the Alliance of Artists and Recording Companies sought to enjoin the manufacture and distribution of the Rio Portable MP3 player without appropriate licensing as required under the Audio Home Recording Act ( A.H.R.A. ). 11 They also sought rental royalties from Diamond Multimedia Systems, alleging that the MP3 player violated the requirements for digital audio recording devices under the A.H.R.A. 12 The R.I.A.A. claimed that the Rio Portable MP3 player violated the requirements for digital audio recording devices because it did not employ a Serial Copyright Management System that sends, receives, and acts upon information about the generation and copyright status of the files that it plays, as required under the A.H.R.A. 13 In Diamond, the Ninth Circuit addressed whether the Rio Portable MP3 player was a digital audio recording device subject to the restrictions and required royalty payments under the A.H.R.A. Diamond Multimedia Systems argued that its product was exempt from A.H.R.A. because this equipment could not be used to create additional copies. Under 17 U.S.C. 7 Id. at 423. 8 Id. 9 180 F. 3d 1072 (9th Cir. 1999). 10 The trade group for record companies for both corporate and independent record labels. Specifically, the R.I.A.A. has filed lawsuits against makers of files sharing programs. 11 Id. at 1075. 12 17 U.S.C. 1001 (1992). 13 Diamond, 180 F. 3d at 1075 (citing 17 U.S.C. 1002(a)(2)). -6 MusicSharing-ARTICLE-02-21-12

1001(3), a digital audio recording device is defined as any machine that is designed or marketed for the primary purpose of, and that is capable of, making a digital audio recording copy for private use. 14 A digital audio recording is defined as any reproduction in a digital recording format of a digital musical recording. 15 Lastly, a digital musical recording is any material object... (ii) from which the sounds and material can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. 16 The Senate s report on the A.H.R.A. stated that a machine or device is not a digital audio recording device if the primary purpose of the recording function is to make objects other than digital audio copied recordings, even if the machine or device is technically capable of making digital audio recordings. 17 The Ninth Circuit stated that, [u]nlike digital audio tape machines [i.e. CD-burners], whose primary purpose is to make digital audio copied recordings, the primary purpose of a computer [or MP3 player] is to run various programs and to record the data necessary to run those programs and perform various tasks. 18 Additionally, the court stated that Rio s operation was consistent with the Act s main purpose, the facilitation of personal, non-commercial use, 19 and therefore determined that the Rio Portable MP3 was not a digital audio recording device and not subject to the restrictions or royalty requirements of the statute. 20 The premiere case involving internet P2P file-sharing was A&M Records v. Napster. 21 14 Id. at 1075 (citing 17 U.S.C. 1001(3)). 15 Id. at 1076 (citing 17 U.S.C. 1001(1)). 16 Id. (citing 17 U.S.C. 1001(5)(A)). 17 Id. at 1077. 18 Diamond, 180 F. 3d at 1078. 19 Id. at 1079. 20 Id. at 1081. 21 239 F. 3d 1004 (9th Cir. 2001). -7 MusicSharing-ARTICLE-02-21-12

Napster was a company that hosted a central server which facilitated and promoted the transmission and retention of digital audio MP3 files by millions of users. Record companies and music publishers instituted litigation against the creators of Napster for secondary contributory and vicarious copyright infringement for creating and distributing its file-sharing software. 22 The Ninth Circuit initially declared that Napster users who downloaded copyrighted music files were direct copyright infringers. 23 The court then considered whether Napster was contributorily liable for the direct copyright infringement of its users. 24 The Ninth Circuit found Napster contributorily liable for the copyright infringement of its users because it knowingly encourage[d] and assist[ed] the infringement of plaintiffs copyrights. 25 The court distinguished Napster from Sony by reasoning that, while the VCR manufacturers in Sony had no control over how people used the technology after the VCRs were purchased, Napster could control the infringing behavior by monitoring their servers. 26 The court also found Napster vicariously liable for the direct copyright infringement of its users. 27 The court reasoned that Napster had direct financial interest in the infringing activity, and had the right and ability to supervise the users conduct. 28 Napster s actions of [t]urning a blind eye to detectable acts of infringement for the sake of profit g[ave] rise to liability. 29 On remand, the district court ordered Napster to monitor the activities of its 22 Id. at 1011. 23 Id. at 1014-15. 24 Id. at 1019. 25 Id. at 1020. 26 239 F.3d at 1022. 27 Id. 28 Id. at 1023. 29 Id. 239 F. 3d at 1023. -8 MusicSharing-ARTICLE-02-21-12

network and to block access to infringing material when notified of that material s location. 30 Napster struggled to comply with the demands of the injunction, and the court ordered that the service be shut down until it could be 100% effective. 31 Napster could not meet the court s order and eventually settled with songwriters and music publishers for $26 million. 32 Currently, the name Napster is back in business and was recently purchased by Rhapsody. It now runs under an entirely different business model that does not permit any downloading. Instead, users are charged a fee for a streaming-only online music service. Law concerning P2P systems continued to develop with the case, In re Aimster Copyright Litigation. 33 The Seventh Circuit found Aimster liable for contributory infringement as a result of software they developed. This software utilized America Online s Instant Messaging Service ( AIM ) to facilitate the transfer of copyrighted files between AIM buddies who used this same instant messenger service rather than using a central server like the users in Napster used. 34 It was held that, since copies of the songs resided on the users computers, and not on Aimster s central server, Aimster could only be contributorily liable and could not be a direct infringer of the copyrights for these songs. Aimster was held contributorily liable because it failed to produce any evidence that its software had ever been used for any non-infringing purpose. The Seventh Circuit stated that if the infringing uses are substantial, even when there are non-infringing uses of an Internet file-sharing service, the provider of the service must show that it would have been disproportionately costly for them to eliminate or reduce the substantially 30 A&M Records v. Napster, Inc., 2001 WL 227083, No. C 99-05183 MHP, C 00-1369 MHP (N.D.C.A. March 5, 2001). 31 284 F. 3d 1091, 1098 (9th Cir. 2002). 32 John Borland, CNET News, Napster Reaches Settlement With Publishers, http://news.cnet.com/2100-1023-273394.html (Sept. 24, 2001). 33 334 F. 3d 643 (7th Cir. 2003). 34 Id. at 646. -9 MusicSharing-ARTICLE-02-21-12

infringing uses of the software to avoid liability for contributory infringement. 35 The Court also found that Aimster had... blinded itself in the hope that by doing so, it might come within the rule of the Sony decision, 36 and that Aimster s software tutorial, which solely used copyrighted music to explain the software s functionality, was the invitation to infringement that the Supreme Court found was missing in Sony. 37 In MGM v. Grokster, the defendant distributed free P2P software, which permitted computer users to share electronic files by facilitating a link between the users computers. 38 As a result of providing this P2P file-sharing software, MGM and other copyright holders brought an action against Grokster arguing that the software providers had engaged in contributory infringement. The district court granted summary judgment in favor of Grokster, which the Court of Appeals for the Ninth Circuit affirmed. 39 In upholding summary judgment, the Ninth Circuit reasoned that the Grokster P2P software was capable of substantial, commercially viable non-infringing uses, and that Grokster s employees had no direct knowledge of specific infringing conduct as a result of the decentralized nature of their product. 40 Without taking Grokster s knowledge of direct infringement into consideration, the decentralized nature of the product prevented Grokster from having the ability to supervise or monitor the use of the product. 41 Thus, Grokster was not found liable because it did not materially contribute to the 35 Id. at 649. 36 Id. at 653. 37 Id. at 651. 38 Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2011). 39 Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 380 F. 3d 1154 (2004). 40 Id. at 1162. 41 Id. at 1165-66. -10 MusicSharing-ARTICLE-02-21-12

copyright infringement of its users. 42 However, the Supreme Court overruled the Ninth Circuit decision, finding substantial evidence that Grokster was contributorily liable for the direct copyright infringement of its users. 43 In coming to this conclusion, Justice Souter reasoned,... one who distributes a device with the object of promoting its users to infringe copyrights, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting infringement by third parties. 44 Therefore, the Court found that even if Grokster s software had been capable of substantial non-infringing uses, which was sufficient to relieve one of secondary liability in Sony, Grokster could still be contributorily liable because it induced its users to infringe. 45 The Court noted the following factors which suggested Grokster had induced infringement, including: (1) advertising and instructing how to infringe; (2) targeting former Napster users known to infringe; (3) failing to take steps to prevent infringement; (4) profiting from infringement; and (5) distributing a tool capable of infringement. 46 In 2010, the Southern District of New York addressed another P2P file sharing issue in Arista Records LLC v. Lime Group LLC. 47 Lime Group LLC is responsible for the computer software program LimeWire, which was one of the most prominent Internet file-sharing services available. In 2000, LimeWire was downloaded an estimated three million times, 48 and had four million users per day when this suit was initially filed. 49 The plaintiffs were thirteen major 42 Id. at 1163. 43 Grokster, 545 U.S. at 934. 44 Id. at 936-37. 45 Id. at 937. 46 Id. at 914-16. 47 715 F. Supp. 481 (S.D.N.Y. 2010). 48 Id. at 512. 49 Arista Records LLC v. Lime Group LLC, 715 F. Supp. 2d 481, 512 (S.D.N.Y. 2010) opinion withdrawn and -11 MusicSharing-ARTICLE-02-21-12

record companies that collectively produced, manufactured, distributed, sold and licensed "the vast majority of all recorded music in the United States. 50 They raised various federal and state law claims of secondary copyright infringement against Lime Group LLC for its role in the distribution and maintenance of the LimeWire software program. 51 The district court, guided by the Supreme Court s decision in Grokster, ruled in favor of the music industry by granting the motion for summary judgment on the claim against the defendant for inducement of copyright infringement. 52 The court estimated that 98.8% of the files requested for download through LimeWire were copyright protected and not authorized for free distribution. 53 To establish secondary liability, the court had to find that Lime Group LLC induced the direct infringement of its millions of users by: (1) [E]ngag[ing] in purposeful conduct that encouraged copyright infringement ; and (2) acting with the intent to encourage such infringement. 54 First, the court noted that there was overwhelming evidence that LimeWire engaged in purposeful conduct that fostered infringement, as Lime Group LLC created and distributed LimeWire so users could commit a substantial amount of infringement. 55 Second, the court established that Lime Group LLC intended to encourage infringement by distributing LimeWire because (1) LimeWire s awareness of substantial infringement by users; (2) LimeWire s efforts to attract infringing users; (3) LimeWire s efforts to enable and assist users to commit infringement; (4) LimeWire s dependence on infringing use for the success of its superseded, 784 F. Supp. 2d 398 (S.D.N.Y. 2011 (Citing 2006 WL 2582075 (Trial Pleading), No. 06 CV 5936 (S.D.N.Y. August 4, 2006)). 50 715 F. Supp. 2d at 494. 51 Id. at 506. 52 Id. at 509. 53 Id. at 507. 54 Id. at 508. 55 715 F. Supp. 2d at 509. -12 MusicSharing-ARTICLE-02-21-12

business; and (5) LimeWire s failure to mitigate infringing activities. 56 Although the district court granted summary judgment against Lime Group LLC for inducing copyright infringement, the court rejected plaintiff s motion for summary judgment on the claim against Lime Group LLC for contributory copyright infringement. 57 The court found a genuine issue of material fact as to whether LimeWire was capable of substantial non-infringing uses, such that liability should not be imposed. 58 Recently, after being shut down by an injunction in 2010, Lime Group LLC settled the case against it. 59 As March 2012, the website is still down, bearing a notice of an injunction and disclaimer regarding the illegal downloading. In 2011, another case regarding file sharing, Capitol Records, Inc. v. MP3Tunes, LLC, was addressed in the Southern District of New York. 60 EMI, Inc. and fourteen other record companies and music publishers (collectively, EMI ) brought suit against MP3Tunes, LLC ( MP3Tunes ) and Michael Robertson. 61 MP3Tunes operated a website that provided free lockers for users to store MP3 files from their hard drive. 62 Songs uploaded to a user s locker could be played and downloaded through any internet-enabled device. 63 MP3Tunes simultaneously operated another website that allowed users to search for songs stored in these digital lockers which are then uploaded to third-party sites where they could be listened to and 56 Id. 57 Id. at 524. 58 Id. at 517. 59 Aaron Smith, New York Judge Orders LimeWire to Close Down, http://money.cnn.com/2010/10/27/technology/limewire_court/index.htm, Oct. 27, 2010. 60 Capitol Records, Inc. v. MP3Tunes, LLC, No. 07 Civ. 9931 (WHP), 2011 U.S. Dist. LEXIS 93351 (S.D.N.Y Aug. 22, 2011). 61 Id. at 7-8. 62 Id. 63 Id. (citing PSUF 5). -13 MusicSharing-ARTICLE-02-21-12

downloaded by other individuals. 64 The court granted summary judgment for EMI s claim for contributory copyright infringement against MP3Tunes, and for direct infringement individually against Robertson, the principal of MP3Tunes. 65 The court also granted MP3Tunes motion for summary judgment and held that MP3Tunes satisfied the threshold requirements to qualify for safe harbor under the Digital Millennium Copyright Act, but that they did not qualify for protection for songs that were stored in its user s online lockers. 66 As of October 2011, the parties other claims remain for judicial determination. However, instead of putting an end to online piracy, the effect of this highly publicized litigation has been to assure that consumers know how easy it is to find free music online through illegitimate but pervasive means. 67 III. Future of File-sharing The small, compressed size of the MP3 file format revolutionized the distribution of digitally stored information by making file-sharing through P2P networks faster and easier than ever before. However, the economic implications of quick and easy file sharing have had devastating effects on copyright owners. Although the record companies have won several landmark cases that resulted in file-sharing companies being put out of business, history suggests that the public will always find new ways to circumvent the law. In 2008 alone, there were over forty billion downloads of music files, ninety-five percent of which were illegal. 68 This exorbitant file sharing is widely considered the cause of the dramatic drop in CD sales as the 64 Id. at 2 (citing PSUF 8 and Horowitz Decl. 23 24). 65 Capitol Records, Inc. v. MP3Tunes, LLC., No. 07 Civ. 9931 (WHP), 2011 WL 174209, at *16 (S.D.N.Y. Aug. 22, 2011). 66 Id. 67 SIEGEL, HOWARD, ENTERTAINMENT LAW, 49 (Lexis Nexis, 3 rd Edition, 2004). 68 Resources IFPI Publishes Digital Music Report 2009, http://www.ifpi.org/content/section_resources/dmr2009.html Jan. 16, 2009. -14 MusicSharing-ARTICLE-02-21-12

increasing popularity of file sharing coincided with the market drop for CDs. 69 In addition to targeting the P2P software providers, the recording companies have brought suit against individuals who downloaded and shared copyrighted songs without authorization. Record companies have sued more than 6,000 LimeWire users for direct copyright infringement [ and] have obtained judgments against more than 700 users and have settled claims against almost 4,000 users. 70 The damage awards and other litigation costs imposed upon individual infringers, as well as the publicity surrounding such cases, have arguably had some deterrent effect on Internet users infringing activities through online networks. 71 However, despite the possible deterrent effect the lawsuits may have had on the public, record companies, through the R.I.A.A., have discontinued their pursuit of litigation in an attempt at more efficient prosecution efforts. 72 The recording industry now believes that working through Internet Service Providers ( ISPs ) provides a more feasible way of battling illegal file sharing. The R.I.A.A. has reached agreements, at least in principle, with some ISPs to prevent illegal file sharing. Many recording companies have also entered into agreements with several ISPs to implement a graduated response program. These graduated response programs would consist of warnings issued to customers to stop the infringing activity. Penalties for disregarding the issued warnings include diminishing the customer s download and upload speeds, as well as terminating the customer s 69 R.I.A.A. Recording Industry Association of America, http://www.riaa.com/faq.php (last visited October 7, 2011). 70 Arista Records LLC v. Lime Group LLC, 784 F. Supp. 2d 398 (S.D.N.Y. 2011). 71 See Sony BMG Music Entm't v. Tenenbaum, No. 10-1883, 2011 WL 4133920 (1st Cir. Sept. 16, 2011) (Judgment was entered against defendant in the amount of $675,000 for sharing 30 tracks on a peer-to-peer network); see also Capitol Records Inc. v. Thomas-Rasset, 680 F. Supp. 2d 1045, 1050 (D. Minn. 2010) reconsideration denied, CIV. 06-1497 MJD LIB, 2010 WL 4286325 (D. Minn. Oct. 22, 2010) (The court declared a judgment for $1.92 million for damages in the amount of $80,000 per song for 24 songs was not considered excessive). 72 Sarah McBride and Ethan Smith, Wall Street Journal, Music Industry to Abandon Mass Suits, http://online.wsj.com/article/sb122966038836021137.html. Dec. 19, 2008. -15 MusicSharing-ARTICLE-02-21-12

Internet access altogether. ISPs in other countries are beginning to implement a three strike rule. 73 Currently in France, around 700,000 ISP users have received warnings a strike of infringing use. 74 Around 44,000 ISP users have received a second strike, and sixty users are about to receive a third strike that could result in a fine and temporary loss of Internet service. 75 Several major ISPs have also began implementing graduated response programs, including Cox Cable, Qwest, Verizon and AT&T, each with differing views on the repercussions users shall face. While Verizon and AT&T have found the mere threat of being disconnected sufficient to scare infringing users, Cox and Qwest have taken it a step further and actually removed repeat offenders from their service. Although it is unclear how successful the graduated response program will be in the long run, and whether it will have any effect on new trends such as Cloud computing, the R.I.A.A. is pleased with the current successes and hopes to deter copyright infringement in this way. The recording industry must now focus on a real strategy to innovate, and develop a new business model to be more competitive in the digital age. 73 David Kravets, U.S. Signs International Anti-Piracy Accord, http://www.wired.com/threatlevel/2011/10/united-states-signs-acta/ Oct. 3, 2011 (the United States entered into an agreement with Australia, Canada, Japan, Morocco, New Zealand, Singapore and South Korea regarding the Anti-Counterfeiting Trade Agreement in an attempt to eliminate and deter copyright infringement). 74 Glenn Peoples, Billboard.biz, Business Matters: 700,000 French ISP Subscribers Have Received an Infringement Warning, http://www.billboard.biz/bbbiz/industry/digital-and-mobile/business-matters-700-000-french-isp-subscribers-10053 83992.story. Oct. 4, 2011. 75 Id. -16 MusicSharing-ARTICLE-02-21-12