America's new cubicle pirates find their loot online

Teens and their insatiable appetite for free music have highlighted the legal problems of sharing audio, video, and other files online. But there is mounting evidence that adults may be breaking the law just as frequently.

Many adults who download files - which are often pornographic videos - do so on their company networks, according to new studies, consuming sizable chunks of bandwidth and other resources and putting their companies at risk of lawsuits for copyright infringement.

Already, the Recording Industry Association of America (RIAA) and the Motion Picture Association of America (MPAA) are dropping subtle hints that corporations may be the next target of an already massive lawsuit campaign against file-sharers.

"To date, we have not taken actions against individuals the way the music industry has, but we don't rule out anything," says MPAA spokesman Rich Taylor. "We have arrows in our quiver, and we'll do what we need to."

In one of the first studies of its kind, Blue Coat, a network monitoring company in Sunnyvale, Calif., reported last week that 39 percent of employees who use file- sharing services do so on company networks. That kind of activity can easily consume a third of a company's bandwidth, according to Blue Coat.

But wasted bandwidth may be the least of a company's worries, according to the Blue Coat survey of 300 respondents from public and private firms. Peer-to-peer downloading also consumes network storage, can result in lower worker productivity, and poses considerable legal risks.

"We've always assumed this is a youth thing," says Eric Garland, chief executive of Big Champagne, an online media measurement firm in Los Angeles. "But ... the motivation that drives the kids in dorms is the same motivation that drives the overgrown kids in cubicles."

Both groups get free access to high-speed Internet and vast storage capacity for their files, he adds.

Unlike college students, however, employees don't have a right of privacy when they're on a corporate network, and most activity within the network can be tracked, says Deborah Peckham, an attorney specializing in copyright law and file-sharing.

"Technologies are out there that will allow employers to monitor not just file-sharing, but how the network is being used in general - particularly with pornography. If an employee is downloading with the knowledge of the employer, or the employer should have had knowledge, the employer is liable under a theory of contributory copyright infringement."

Surprisingly, some companies appear hesitant to crack down. "Most organizations are not going to want this going on in their network because it does not help the business in any way," says Frank Cabri, director of corporate marketing for Blue Coat. "But we've seen organizations that aren't concerned about it and don't want to admit it's an issue."

Among file-sharers everywhere, the amount of material that is pornographic is high and rising. In the past 18 months, the share of peer-to-peer network traffic accounted for by video files jumped from 12.4 percent to 36.2 percent, according to Big Champagne. And 50.7 percent of all video files being shared are pornographic - up from 42 percent last September.

Unless workers are better educated about copyright law and firms begin to monitor online activity more carefully, file-sharing on company networks will continue unabated, observers say. What's more, many small Internet vendors of pornography consider file-sharing free marketing and have little reason to sue for infringement, says Tom Hymes of AVN Online, a business magazine about the porn industry.

"These often young Internet entrepreneurs - and that's really what they are - are very unsophisticated," he says. "They don't have any marketing skills. File-sharing gets their name out there."

But beyond copyright issues, the rampant sharing of pornography could lead to ever more raunchy material, if the trend goes unchecked. "They're so aggressive, and there are no rules for how they go out and sell," Mr. Hymes says. "They'll do anything to make a buck. This is one of those points where culture clashes with innovation and technological advances - and with something that's even more unstoppable, which is this great entrepreneurial spirit."

Some observers suggest that file-sharing services should be held more accountable than corporations. "Both adults and kids are downloading infringing music and porn," says Steven Fabrizio, an expert on new media and copyright and an attorney for the RIAA. "These file-trading services do nothing of consequence to keep kids from accessing porn."

While songs are typically as small as 5 megabytes, video files can easily take up more than 300 megabytes of space. Thus, a couple of employees downloading video can easily reduce by 30 percent a company's capacity to download data at any given time. And the traffic of video files will continue to expand as broadband becomes more affordable, experts suggest.

"When bandwidth increases, movies clearly are going to be a problem, and we're already seeing that," says Vance Ikezoye, CEO of Audible Magic, an audio fingerprinting technology firm in San Jose, Calif. "In pure file sizes, video is already overwhelming the traffic, and of those files, porn is clearly over half."

But Mr. Garland of Big Champagne predicts that pornographic videos, which are usually shorter and lower in quality than other video files, will gradually take up less space on file-sharing services. "As hard-drive capacity grows and bandwidth becomes cheaper, people have more storage and better access. That lends itself to larger and larger files."

In other words, as corporate networks grow, workers will be more likely to download pirated versions of Hollywood's high-budget films, rather than the lower-quality fare.

Ultimately, experts on all sides agree, education is the most effective weapon against file-sharing copyrighted material. When employers are responsible for the behavior on their networks, the weight falls on their shoulders to craft comprehensive usage policies and to enforce them. "But employers right now are still trying to get their heads around privacy laws and complying with those," says Jonathan Ezor of Touro Law Center in Huntington, N.Y.

However, just as education on college campuses didn't prompt the business world to stop file-sharing, educating employees doesn't eradicate file-sharing outside corporate America.

The task of the film industry, Mr. Taylor of the MPAA says, is to change the cultural acceptance of file-sharing. "Taking a movie without paying for it is no different from walking in and taking a movie off the shelf at Blockbuster and walking off without paying for it," he says. "It's illegal."