Grokster Gone, RIAA Gloats

On November 7, four months after a Supreme Court decision determined that file-sharing services could be held liable for the actions of their users, Grokster agreed to stop distributing its software and to pay $50 million in damages.

Grokster's settlement will not halt Grokster users' ability to copy movies, CDs, and software from one another's hard drives, due to the decentralized nature of peer-to-peer file sharing. That genie is long out of the bottle. According to the BBC, online analyst BigChampagne reported that peer-to-peer networks had logged over 9.3 million users in October 2005, up from 6.3 million in October 2004.

Grokster's website says it hopes to have "a safe and legal service available soon" and directs those interested to go to Grokster 3G for data on its legal solution. Rumor has it that Grokster will be sold to Mashboxx, which was founded by former Grokster president Wayne Russo and has a licensing deal with Sony BMG.

Grokster's co-defendant in the MGM vs Grokster case, StreamCast Networks, has pledged to continuing fighting it.

On November 18, Recording Industry Association of America (RIAA) president Cary Sherman held a press conference with Cpnewslink, "a leading provider of electronic content and services to the nation's print and broadcast college media," in order to address the Grokster decision and the closure of the i2hub network, which the RIAA had targeted in a flurry of lawsuits against 405 students at 18 different colleges last April.

"What does all this mean?" Sherman asked the audience. "Contrary to what you might think, it means even more options for enjoying music and movies online. These developments have given the legitimate online marketplace a tremendous boost—enhancing our ability to invest in new bands and new music." Citing the development of "legitimate music services" at over 80 campuses, Sherman said that suppressing piracy would insure that music companies would have the funds to "invest in the next great up-and-coming band you have yet to hear about."

The collegiate press didn't seem to buy that, however. In the Q&A session that followed, Sherman was grilled on a variety of topics. Asked about CD pricing, Sherman responded that a lot of that money goes to the record retailer (In many cases, it's less than a buck.—Ed.) and all the "countless others who have contributed to that recording or to trying to make that recording a commercial success."

Asked about digital rights management, Sherman said that DVD movies and video games were far more restrictive than music recordings. "How many burns are you allowed of a movie? None. How many of a video game? None. You get the idea. Even the CDs with content protection allow consumers to burn three copies or so for personal use. The idea is not to inhibit personal use, but to allow personal use but discourage (not prevent, you can never prevent) copying well beyond personal use."

As for the RIAA's penchant for suing students who had used p2p file sharing networks, Sherman stated, "Obviously, anyone who has stopped downloading (or uploading) illegally will not get sued. ... For generations, students have spent their hard-earned dollars on the music they love in the local college record store. How many of those stores are left now?"

Got that? Those stores didn't go broke over the last 20 years because the major labels discontinued discounts to one-stop jobbers and cut sweetheart deals with national retailers back in the 1980s and early 1990s, it was because students stopped spending their "hard-earned dollars" at such stores recently.

Sherman's peculiar pretzel logic also extended to Sony BMG's root kit cloaked DRM. Asked by The Columbia Spectator if the RIAA condoned that crudely written batch of code, Sherman said, "The problem with the Sony BMG situation is that the technology they used contained a security vulnerability of which they were unaware. They have apologized for their mistake, ceased manufacture of CDs with that technology, and pulled CDs with that technology from store shelves. Seems very responsible to me."

Gee, we simply hadn't thought of it in those terms. From where we sit, it looked like Sony tried to pull a fast one, got caught, attempted to stonewall it, got caught, issued a "patch" that didn't address the problem, got caught, waited three days and then ceased manufacturing CDs with that technology, waited a few more days and then pulled the existing CDs off the shelves after their retailers informed them that Sony BMG CDs had turned into retail poison, whether or not they had the F4i technology.

Sherman asked, "I wonder if software manufacturers [who've issued buggy software] have taken as aggressive steps as Sony BMG has when those vulnerabilities were discovered, or did they just post a patch on the Internet?" Gosh, yes, we consumers are indeed fortunate to have companies like Sony BMG looking out for us—and isn't Sony BMG lucky to have Cary Sherman on its side?

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