What is a fair penalty for illegal file-sharing or piracy?

This week a federal jury handed down the verdict in the third file-sharing trial against a Minnesota mother of four who has been fighting against the charges brought by the RIAA since 2005. The jury found Jamie Thomas-Rasset guilty of pirating 24 copyrighted songs from six different record labels and awarded the plaintiffs $1.5 million in damages, or an astounding $62,500 per song.

Understandably, a lot of people are outraged by this verdict and while reading through comments about the fine on some online forums, I saw some interesting opinions on how these fines should be assessed. The point that $62,500 per song is excessively high seems to be something that everyone can agree on, but what actually is fair seems to be a big point of contention.

What is a fair penalty for illegal file-sharing or piracy?

Much of the media is comparing the verdict to a case in Germany where a 16 year-old was fined $21 per track for illegally sharing two songs. A stark contrast, indeed, but a fine that low won’t do much to deter such behavior in the future.

A commenter on one website said that sharing a CD online is really no different than stealing one from a store, and a lot of others seemed to agree with that notion. But that comparison isn’t at all accurate. For the scenario to be even remotely similar, someone would have to not only steal the CD, but then would have to make copies and start handing them out to anyone who was willing to come and get it. What would be a penalty for that? Bootlegging doesn’t apply because the person isn’t generating any income from the endeavor.

The fines would become even more complicated when you consider how much money a record label is actually losing for the illegally-shared songs. Popularity of the tracks in question would need to be a factor because a label would lose a great deal more sales revenue on a track that is in high-demand than on one that isn’t as well-known or publicized. If you were to calculate the value of each of the tracks in question and multiply that by the number of times each was downloaded from Thomas-Rasset’s computer, I would bet that it wouldn’t even come close to a total of $1.5 million.

What is even more appalling about a judgment like this is that the artists who created the songs will never see a penny of the money. The RIAA has openly said that, “Any funds recouped are re-invested into our ongoing education and anti-piracy programs.”

The United States justice system has allowed this case to drag on for five years and three trials without a decent resolution or precedent for future cases. Yes, cyber-crimes are a relatively new thing to deal with and are difficult to judge, but isn’t it time that we started laying some sensible groundwork down for this type of thing?