Although the term "file sharing" has all sorts of ugly connotations, it's not necessarily a bad thing. In some cases, it's even a win-win-win situation for the recording industry, music lovers -- and Google.
There are countless MP3 file-sharing sites that don't look anything like BitTorrent or Lime Wire. They're low-key, homegrown blogs that don't host illicitly copied music, but do provide links to third-party sites, or storage lockers, such as Megashare, where pirated music is stored. These bloggers do it for the love of the music, they say, but it doesn't hurt that they make a little money from advertising along the way.
The low-profile success of MP3 blogs, and the apparent unconcern of the music industry, is in stark contrast to the aggressive anti-piracy actions taken by the Recording Industry Association of America in other spheres. For instance, the RIAA recently won a $222,000 judgment against a single mother of two for using file-sharing software Kazaa to trade copyright files. No similar action has been taken against MP3 bloggers.
Many of these sites, like Hangover Heart Attack and It's Coming Out of Your Speaker, run ads through Google's AdSense program, which means that Google, too, makes money from sites that direct people to bootleg MP3 files.
Anyone can sign up for AdSense -- bloggers, publishers, nonprofit groups or even aspiring poets -- although Google's terms-of-service agreement prohibits websites that promote illegal activity or infringe on others' rights. Google sells ad space on members' sites, and it splits the revenue with the publishers.
Technically, these blogs could be considered illegal. The RIAA could make a claim that bloggers who direct people to pirated music may be committing "contributory copyright infringement." And a claim could even be made against Google for profiting from the sites, says attorney Eric Custer, a partner at Manatt, Phelps & Phillips.
But who wants to put a stop to it? The RIAA declined to comment for this story, but the publisher of one MP3 aggregator, who asked to remain anonymous, says music labels have been extremely cooperative. This blogger monitors more than 3,000 music blogs daily, providing links to files that have been uploaded to various music lockers. And no, the blogger has never been asked by a label to take a link down.
"Actually, we've been contacted by labels, promo agencies and even musicians and bands to help promote them. Which we've done, free of charge," the blogger wrote by email. The blogger also has the impression that the site has helped expose people to music they wouldn't otherwise hear, and may even help drive CD sales, although there's no hard evidence of this.
A major moneymaking operation it is not. The blog, which generates thousands of pageviews daily from thousands of unique visitors, makes its creator just 75 cents for each hour put into it.
Google keeps the AdSense revenue split confidential, so it's unknown exactly how much the company makes from each publisher in the program. In a recent SEC filing, Google said it pays "most" of the fees it makes from advertisers to publishers. A 2006 New York Times report suggested one publisher, Digital Point Solutions, took home 78.5 percent of the revenue, presumably leaving 21.5 percent to Google.
Whatever the split, AdSense is an incredibly profitable operation for the company, generating billions in revenue each year. In the third quarter of 2007 alone, Google made $1.45 billion, or one-third of its revenue, from AdSense. The amount of money generated by music bloggers, though, could be fairly marginal.
"Proportionately, I think (blogs) probably represent a very small percentage of the file-sharing market," says Eric Garland, co-founder and CEO of BigChampagne, a Beverly Hills, California, market research firm that follows the file-sharing universe. "There are always going to be different mechanisms or vehicles for exchanging files, but ultimately, people go to a search-driven environment that you find in file-sharing applications."
For its part, Google denies responsibility for content on the AdSense network and says it acts fast when it identifies publishers who violate its terms of service. And to enforce this policy, Google reviews participating sites to weed out content that violates the AdSense terms-of-service contract.
"In the same way we crawl websites (for our search service), we crawl publisher websites to flag information that may violate our policy," says Google spokesman Brandon McCormick. "Every site at some point goes through a manual review. It's something we take very seriously."
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