“Got kitesurfing on the mind, mixed with some search & classification tech, and a dab of political ranting”

Don’t believe the P2P hype

Posted by direwolff on June 28, 2005


Cyberspace is alive today with grumbling sounds extolling the death of P2P innovation, that the Supreme Court's ruling on MGM v. Grokster will chill enthusiasm from Venture Capitalists for companies in this space. Well I say "bull!". If anything, the door for opportunity has been opened wide.

First off, most of the articles I've read on the subject seem to be written by people who did not properly read the decision before commenting. Within the first two pages I found the following paragraph ("respondents" refers to Grokster):

Discovery revealed that billions of files are shared across peer-to-peer networks each month. Respondents are aware that users employ their software primarily to download copyrighted files, although the decentralized networks do not reveal which files are copied, and when. Respondents have sometimes learned about the infringement directly when users have e-mailed questions regarding copyrighted works, and respondents have replied with guidance. Respondents are not merely passive recipients of information about infringement. The record is replete with evidence that when they began to distribute their free software, each of them clearly voiced the objective that recipients use the software to download copyrighted works and took active steps to encourage infringement. After the notorious filesharing service, Napster, was sued by copyright holders for facilitating copyright infringement, both respondents promoted and marketed themselves as Napster alternatives. They receive no revenue from users, but, instead, generate income by selling advertising space, then streaming the advertising to their users. As the number of users increases, advertising opportunities are worth more. There is no evidence that either respondent made an effort to filter copyrighted material from users' downloads or otherwise to impede the sharing of copyrighted files.

Basically, this says, that if you create something for the express purpose of breaking the law and help others act on that, and make money from those actions (in this case it was through advertising), then you can be held liable for damages, in this case, to copyright owners whose rights are being violated.

In continuing to read the decision (which can be found at…er/04-480.pdf ), the justices also discuss how this relates to the Sony Corp. v. Universal City Studios case where the issue of non-infringing uses is what supported Sony's claims that it did not willingly create nor support the violation of copyright holders' rights. We can argue about whether copyright law is fair or not, and I have plenty to say about its abuses, but the reasoning stands that the fairness of those laws stands apart from whether one decides to violate them.

Suffice it to say, had Grokster (or Streamcast (aka. Morpheus)) not helped their users download illegal music by replying to e-mails on the matter, perhaps even placed a notice somewhere saying that this doing so was illegal and that they did not condone this behavior, and focused their product pitch on how useful these were for legitimate applications, then perhaps they might have avoided this sad fate. It's clear that what got these folks in trouble was thumbing their noses at the law under the guise that the Sony case absolved them of responsibility for copyright violations. They were wrong.

I do believe that had Grokster taken the precautions above and maybe even integrated something like Paypal into their platform for copyright owners to charge if they wanted to, this would have gone a long way towards gaining some sympathy for their efforts. At which point it would have been difficult to say that they were not at least trying to do the right thing.

Recently, I had a chance to sit with an old acquaintance that shared some of his company's P2P initiatives and I do not see this latest Supreme Court ruling getting in the way of his plans. Hence, all the hubbub and negative press is really being over played. As well, there's now an opportunity for a company to come up with a P2P filesharing solution that makes sense for legitimate purposes, which those still wanting to violate copyrights will make use of for their own purposes. Nothing will change except that company's respect for the rules.

Don't know when I got to be such a crony on this stuff. I still see a long fight ahead for copyright issues, but this will be around the term that they're being extended to, not whether intellectual property ought to be subjected to theft.

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