Word Spy - bitlegging

bitlegging pp. The illegal copying of software and digital music.

Example Citation:

Bitlegging (v): Downloading copyright-protected digital music files from the net. As illegal as bootlegging, but the sound quality is better.
—"Tech talk," Management Today, October 31, 2002

Earliest Citation:

MP3.com makes available free, legal MP3 files from artists wanting the exposure. Visit the music section www.mp3.com/music/. Of course, downloading a ripped-off version of, say, the All Saints' Never Ever is the digital equivalent of bootlegging (bitlegging?).
—John Graham-Cumming, "Living with the Net: Make your PC really sing," The Guardian (London), March 11, 1999

Notes:

American Dialect Society member Grant Barrett alerted me to this blend of bit and bootlegging.