? Abstract In this essay, several studies are examined that illustrate the economic impact of digital piracy on the music industry and the U.S. economy. Also examined are the changes made in copyright laws, as well as the recording industry’s strategies designed to deal with this growing problem. The first study, done for California Management Review in 2010, shows steady industry growth throughout 1990’s quickly eroded with Napster’s rise in popularity in 1999. A second study, completed in 2009 for the International Science Review, backed up earlier claims made by the recording industry in Federal Court that they account for a significant portion of the U.S. Gross Domestic Product. The study also shows a direct correlation between increases in file sharing and decreases in sales. The final study examined was completed in 2009 for Contemporary Economic Policy. It offers evidence that the recording industry’s partnerships with digital content providers, is having a positive effect on consumer’s willingness to pay for low priced premium content. Further research is required in order to measure the impact these [and yet to be] partnerships have in reducing online piracy. Keywords: digital piracy, music piracy, file sharing, economic impact, U.S. Copyright Law Captain Crook: Why the Recording Industry must Adapt to the Digital Age According to the U.S. Department of Commerce, the Entertainment Industry [as a whole] accounts for 6% of the United States Gross Domestic Product [GDP] (Bender & Wang, 2009). Since 1999, the RIAA [Recording Industry Association of America] has seen sales of recorded music drop from $14.6 billion in 1999, to $7 billion in 2011 ("Scope of the Problem," n.d.). The source of the recording industry’s dramatic losses since 1999, are the pervasive number of sites that offer free uploaded music available for downloading and sharing. These sites have crippled a music industry that many felt had been too slow adapting to changes in the way music was being sought after and ultimately consumed. The act of making music available on-line [uploading], and/or copying said music [downloading], for free, without compensating the copyright holder, is called piracy. Piracy is a form of copyright infringement. No matter what name it is given, piracy is a criminal act that is wrong and is impacting the Recording Industry and this country’s economic recovery. A major issue that must be addressed is the overall attitude of indifference towards illegal downloading. This is especially true with the generation that came of age at the turn of the Millennium. The role of technology in their lives, and its ability to provide instant access to information, informs how they perceive information and its uses. It’s not to say this generation condones theft; they simply don’t see it as stealing. To them, downloading and sharing digital music files without paying, is nothing more than an exchange of information. Traditionally, this is the very demographic that has always been the recording industry’s bread and butter. There are those who would argue that the current copyright laws are outdated and no longer apply in the 21st century. In the opinion of some, the rules have changed; and so must the very definition of what constitutes copyright theft. Regardless, there is no denying the legalities of this issue must be addressed. In the meantime, the recording industry and lawmakers have pro-actively sought to adopt more pragmatic policies and legislation enabling them to compete with illegal file sharing. By pursuing partnerships with Digital Service Providers [DSPs] and utilizing digital media marketing strategies, the recording industry can create value and demand for their products; making illegal downloading less and less attractive. Background and Brief History Piracy, as it pertains to this subject, is defined as “the act of illegally reproducing or disseminating copyrighted material, such as computer programs, books, music, and films” (Hosch, n.d.in Encyclopedia Britannica). Music piracy, or bootlegging, has been a problem for record companies for as long as the recording industry has been around. However, since the advent of personal computers and the rapidly expanding digital age, digital [or on-line] piracy has become a major problem for the music industry. By the late 1990’s, readily available computer software made it even easier to copy music in many formats and compress it into a digital file, or MP3 format, that is easily transferrable. Music could then be shared by simply uploading it to a file sharing site where anyone could download it for free. These sites became known as P2P [peer to peer] sites ("Napster," n.d.). The Sound Recording Act passed by Congress in 1971, allowed for an array of reforms to copyright laws. The three biggest reforms were the lengthening of copyright terms, first in 1976, and then again in 1998. In 1984, Congress banned the r