As the rate of file sharing grows along with the average internet connection speed, the music and film industries are finding it increasingly difficult to battle against copyright infringements, writes Jim Colganin New York

One fact to emerge from last week's US Supreme Court hearings on illegal file trading cannot be encouraging for the entertainment industry - file sharing makes up half of all internet traffic.

According to a company that tracks the networks, the combination of web browsing, e-mail, instant messaging and anything else usually associated with legitimate internet use, shares the same amount of space on the net as peer-to-peer activity.

In the industry's bid to stamp out what they see as a threat to the future of creative works, they argue that the majority of files traded are illegal. As a result, film studios and music label representatives want the US's highest court to outlaw the software that helps make this happen.

But as the rate of file sharing grows along with the average net connection speed, the industry is finding it increasingly difficult to keep up. The applications used to download music and films have adapted along with the legal tactics, proving such makers an increasingly elusive target.

Six years ago, one program held a near monopoly on the concept of popular file swapping. Until a judge shut it down in 2001, Napster was the primary means of trading illegal MP3s.

Currently, there are more than 20 peer-to-peer networks. With names such as Gnutella, eDonkey, and FastTrack, each one works with a different application, such as Grokster or KaZaa. The networks vary in method, but have one thing in common nowadays: none relies on a centralised server.

Unlike Napster, the networks do not play a direct role in the content offered for download and, thanks to this autonomy, the youngest file-sharing generation has out-manoeuvred legal action for three years.

The latest development in the war between file-sharing networks and the music and film industries took place before the nine US Supreme Court justices late last month. The case of MGM versus Grokster, to be decided this summer, pits a consortium of 28 film studios against two firms that make file-sharing programs.

Two lower courts already ruled in the software makers' favour, invoking a 1984 Supreme Court ruling on video recorders. That decision hinged on the fact that the VCR was "capable of substantial non-infringing uses" despite its potential for illegal copying. But the industry wants the court to examine the software's dependence on copyright violation for survival.

In February, there were 8.5 million people simultaneously using peer-to-peer networks, according to BigChampagne, a Beverly Hills-based firm that tracks this data. The industry claims that 90 per cent of this is illegal but, the company says, it is impossible to distinguish the legitimate from the pirated.

Some programmers use the networks for distributing copyright-free software, smaller artists upload their songs to market themselves, and the band Wilco made an entire album available without restrictions when a label refused to release it.

"The worst outcome for peer- to-peer would be that Morpheus and Grokster will be deprived of commercial opportunity," says Joe Fleisher, a co-founder of BigChampagne.

But if Grokster loses the case and the court outlaws that business model, analysts say the software will persist nonetheless.

Unlike Grokster, some of the recent file-sharing platforms are open source and have no profit-making company behind them. BitTorrent is one example and is thriving as a means of facilitating transfers.

The network makes it especially easy to download entire films thanks to an efficient way of splitting up large files and it also bypasses an tactic of uploading corrupt or "decoy" files to the networks.

Targeting software makers is just one aspect of the entertainment industry's long-running strategy to thwart file sharing. If this bid fails, legal analysts say, the only alternative is to go after individual downloaders.

The music industry has pursued these high-profile lawsuits for two years and Nicholas Thompson, an editor at Legal Affairs magazine, predicts the same for the film industry. "They will take on the same battle. But the assumption is it looked really bad for the music industry to sue teenagers and grandmothers."

The Motion Picture Association of America (MPAA) announced the start of its strategy in November when it said it plans to sue 200 individuals for downloading films.

Although the industry continues to pressure illegal downloaders, its advocates are quick to recognise the extent of the challenge.

"We're probably never going to stop it entirely," MPAA president Dan Glickman told a radio station after the Supreme Court hearing. "We've got to make it as difficult as possible. We've got to make sure people are not anonymous if they do this."

In fact, file sharing may get harder to track if anonymous networks, such as Mute and Freenet, grow in popularity.

However, the record labels have some encouraging figures. Only 22 per cent of internet users in the US say they download music files, according to a study in January by the Pew Internet & American Life Project. This is down from 32 per cent in 2002 (although it dipped to lower last year).

But the study also showed that almost half of the file traders interviewed said they go outside the traditional networks, opting for more conventional means such as e-mail.

The Supreme Court could apply the same test as it did to video recorders 10 years ago, pointing to the potential for legitimate use, but Thompson says it is likely to come up with a new standard more relevant to today's technology.

Some analysts think the industry will reach a compromise. "If history is any guide, a new balance will be struck that will allow content creators to make money and be flexible enough for users," says Mike Godwin, legal director of Public Knowledge, a Washington-based intellectual property research group.

Others believe that illegal file sharing is too widespread to halt its growth. Andrew Zolli, president of Z+ Partners, says that the industry's fight is futile since the internet was designed for file sharing.

"They may win this case, they could win a hundred cases. But they will never stop file sharing, ever. The genie is out of the bottle," Zolli says.

Ironically, in one way, the industry already profits from its perceived threat. BigChampagne's biggest customers are the major record labels, which pay for market research on the most popular downloads.