Will file traders be willing to compromise convenience and usability in exchange for concealing their activities from litigious copyright enforcers?

The question is growing increasingly urgent. The Recording Industry Association of America (RIAA) is threatening to sue file traders for alleged copyright violations, and has convinced a judge to force Verizon Communications to reveal the identity of a long-contested Kazaa user. The RIAA has already successfully sued four university students, prompting schools to crack down on file trading on their networks. Copyright holders can currently locate file traders by simply issuing a subpoena under the Digital Millennium Copyright Act.

The largest P2P network, Kazaa, does not make it easy for users to remain anonymous. P2P networks are designed to efficiently broadcast the contents of shared folders, and the IP addresses of users can easily be traced back to the ISP, company or university network. So far, neither Kazaa nor Grokster has detected any great demand from users for enhanced anonymization.

Legal threats have not decreased traffic on these networks. This makes sense when you consider how many hundreds of millions of file traders are out there and how difficult it would be for the entertainment industry to sue even a large fraction of them.

But even P2P networks that try to help conceal their users’ identities are running into trouble. A federal appeals court recently issued a fuzzy ruling that seemed to indicate that the P2P network Aimster, which provides encryption, could be liable for contributory copyright infringement because it helps conceal illegal activities and hampers the search for evidence. 

The ruling is bound to frighten some P2P networks that want to offer encrypting services or anonymizing services, yet fear a deep-pockets legal action by the entertainment industry.

Some P2P networks, like Blubster, are cashing in on legal concerns for marketing purposes. Blubster is offering a "new, secure, decentralized, self-assembling network that provides users with private, anonymous accounts." Blubster might help mask how many files a user has for download, but it doesn't conceal IP addresses.

Helping to conceal the number of files traded could deflect investigators who would target users on P2P networks that they could easily profile with automated search programs. But the entertainment industry could also single out providers that offer privacy enhancements just to discourage others from doing so.