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Supremes -- Grokster bad, music industry good

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  • Supremes -- Grokster bad, music industry good

    NEW YORK (Billboard) - At the Washington, D.C.,headquarters of the Recording Industry Assn. of America on June27, top officials watched computer screens in the conferenceroom, eagerly awaiting the Supreme Court's ruling on what maybe remembered as the most significant copyright case for theentertainment industry; when the news broke at about 11 a.m.,they jumped, whooped and exchanged high-fives.Meanwhile, in the California bedroom of Michael Weiss, theCEO of peer-to-peer software provider StreamCast, the mood wasmore subdued. Weiss sat, repeatedly refreshing the Web page forthe SCOTUS blog. "I was stunned," he says. "I could not believewhat I was reading. I was surprised I didn't hit something. Ididn't know what to do: stay home and start working on myresume or go to the office and start taking phone calls."
    The two responses pretty much sum up the tone and nature ofthe comments from both sides of MGM vs. Grokster. The Courtsided 9-0 in favor of copyright holders, and against P2P firms.It held that anyone who distributes P2P software with theobjective of promoting copyright infringement is liable for itsusers' actions and sent the case back to District Court in LosAngeles for further review.
    It has been a long time since such elation has been heardin the voices of major label executives. As the fight againstpiracy continues, the business strategists and dealmakers aremoving full speed ahead to meet the digital demands andchallenges.
    "'Thou shalt not steal' -- the seventh commandment --punched through," Sony BMG Music Entertainment CEO Andrew Lacktold Billboard. "Many of us on the creative side have known --have hoped -- that this day would come."
    "The court's decision should strengthen the resolve of allof those who care about a digital future where artists andsongwriters can be fairly compensated for their efforts,"Universal Music Group president/COO Zach Horowitz said. "We'vemade significant investments to prepare for that future, ashave so many legitimate services. The Supreme Court decisionvalidates those investments and drives a stake through theheart of services that rely on theft as a key competitiveadvantage."
    Reactions were more muted in the indie world, where somelabels felt they had benefited from file sharing.
    Even in the file-sharing realm, reactions were mixed, withat least one company, iMesh, seizing the spotlight to announceplans to work with the major labels.
    Still, most in the P2P world -- at least those companieswhose software allows widespread unauthorized file sharing --remained resolute.
    "It's business as usual," Weiss said. "We don't induceinfringement at all. We're just going to continue to innovateand come up with new products."
    While a renewed sense of optimism could be heard throughoutthe industry, no one believes the decision will stop all of thebillions of unauthorized files shared each month on P2Pnetworks. StreamCast says that nearly 140 million copies of itsMorpheus software have been downloaded, and that number justrecently passed the number of Kazaa downloads.
    Even if the operators were shut down, P2P sharing onhundreds of millions of "decentralized" networks can continuefor an undetermined number of years.
    Still, because of the strong language of the Supreme Court,Congress is not expected to respond with legislation. So, tolead music fans away from illegal downloading, "you have tocreate a pathway for the consumer," said attorney JohnFrankenheimer, co-chairman of Loeb & Loeb. "There are alreadylegitimate ways of downloading, such as iTunes and now Yahoo.Just as importantly is the emergence, I'm sure by the end ofthis year, of legitimate P2P services, which will be farsuperior in terms of the experience than anything on theillegitimate side."
    SERVING CONSUMERS
    Adam Klein, EMI Music executive VP of strategy and businessdevelopment, said that now is the time "to get our eyes focused100% where they should be focused, which is creating the rightproduct for consumers."
    He added that EMI also anticipates working with all thelegitimate services. "Anybody who wants to get into seriousconsumer offerings that make sense and that are legal, we willbe with them 100%."
    Horowitz added, "None of us is so naive to think thatdeveloping compelling alternatives that excite consumers is aneasy task. But alternatives exist already and will become evenbetter in the months to come. Universal and all the majors willcontinue to experiment and make their music available as newapproaches show promise."
    Edgar Bronfman Jr., chairman/CEO of Warner Music Group,said in a statement, "As a music company, we fully understandthat our ultimate success lies not in preventing people fromgetting what they want but in providing it to them in new andexciting ways. We must strike a balance, one that nurturestechnological innovation while at the same time protecting thevery content that inspires innovation in the first place."Lack said he expects some of the illegal P2P operators, whohad no incentive to offer only authorized files before thiscourt decision, may soon move over to the legal space. Hebelieves the decision makes it very clear what makes Groksterillegitimate and what makes iTunes legitimate. "People can nowrecognize very easily which is which," and he will do businesswith the legitimate ones.As the industry moves forward encouraging consumers to buymusic, the fight against piracy continues. The labels filed 784more suits against file sharers June 29. While sources close tothe Grokster litigation told Billboard that specific plans havenot been finalized, they expect many more lawsuits to be filedagainst users who share unauthorized files.Horowitz emphasized that the lawsuits are being filed firstand foremost to educate consumers as one part of the overallprocess geared to create a more level playing field forlegitimate services."The labels understand that this is not a battle we winjust by bringing lawsuits," he said. "We win by making ourmusic available to legitimate services that are compellingenough to entice the consumer to use those services rather thanthe illegitimate ones."Lack hoped the Supreme Court decision would, in one or twoyears, make lawsuits over file sharing a thing of the past.Reuters/Billboard

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