Last waltz for Grokster

update File-swapping company Grokster has agreed to stop distributing its peer-to-peer software, following a $50 million legal settlement announced Monday with Hollywood studios and record labels.

Along with co-defendant StreamCast Networks, Grokster had been accused by the music and movie industries of contributing to widespread copyright infringement by people who used its software to download songs and films. Monday's settlement comes four months after the U.S. Supreme Court ruled substantially in the entertainment companies' favor.

Under the terms of the agreement, submitted in a Los Angeles federal court Monday, Grokster will immediately stop supporting its file-swapping network, and Grokster's owners will be responsible for paying a total of $50 million in damages to movie studios, record labels and music publishers.

"This settlement brings to a close an incredibly significant chapter in the story of digital music," Mitch Bainwol, CEO of the Recording Industry Association of America, said in a statement. "This is a chapter that ends on a high note for the recording industry, the tech community and music fans and consumers everywhere."

Although a significant step toward bringing the four-year legal case to a close, the lawsuit is not over yet. Grokster's co-defendant, Morpheus parent StreamCast Networks, remains operating, and it has previously indicated that it would continue fighting the case in lower courts.

However, momentum in the legal fight has shifted almost wholly to the entertainment industry's side.

For several years running, lower courts ruled in favor of Grokster and StreamCast, saying the companies were not responsible for their users' actions. The Supreme Court's ruling in June overturned that analysis overnight.

In a surprising unanimous decision, the nation's top court said that companies that deal in file-swapping software--and by extension, any technology company--could be liable for their users' copyright infringement if they had encouraged or "induced" it in any significant way.

"One who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement," Justice David Souter wrote in the court's majority opinion.

That ruling has sent ripples of anxiety throughout the file-swapping world. The distributors of the WinMX software took their program offline a few months later. Executives at Meta Machine, which distributes eDonkey, the most popular file-sharing program, have said they hope to reach a settlement with the music industry, and change their business into a licensed, industry-approved service.

Grokster's future
Grokster's agreement with the entertainment companies could help accelerate that process.

A Grokster attorney declined to provide additional details on the settlement, or specifics on the ultimate future of the company, but said an authorized download service would ultimately emerge.

"The brand will live on," said attorney Michael Page. "It is shut down, but we look forward to launching a licensed, legal new version of Grokster."

A source close to the company said that the file-swapping network's assets would be acquired by Mashboxx, a legal peer-to-peer network supported by the record labels that is close to launching, and which was founded by former Grokster President Wayne Rosso. The new Grokster will essentially be a rebranded version of that Mashboxx service, the source said.

Visitors to Grokster's Web page on Monday were met with a terse explanation of why the software was no longer available, citing June's Supreme Court ruling, and a promise that a new version would come.

"There are legal services for downloading music and movies," the page said. "This service is not one of them."

[ljrhodes]

The RIAA Doesn't Speak For Me

A representative of the RIAA stated that the settlement with Grokster closes a chapter in the history of the recording industry on a high note not only for the recording industry, but for music fans and consumers everywhere. However, the RIAA, and certainly that representative, do not speak for me.

I am a music fan, and I'm a consumer. I even buy CD's and DVD's, because, well, I like having all the packaging and the better quality of sound and video that come with legit products.

However, I do not believe this has ended on any note that I would consider high. The RIAA has been bullying companies and consumers everywhere with the threats of lawsuits, and in thousands of instances, actual lawsuits, often terrifying unwitting defendants into settling their cases by agreeing to pay thousands of dollars for a few dollars' worth of music.

The RIAA represents companies that have, over the past several years, continuously peddled recordings of what I wouldn't even call music. I certainly wouldn't pay money for it, and I haven't. If I don't like it, I sure as heck won't buy it. And, if I did, I wouldn't pay thousands of dollars for it. I am inclined to believe the tactics of the RIAA have been geared more toward trying to make the recording labels SOME money, however little, from products that few if any consumers would actually buy. What's worse is that the artists who were allegedly ripped off by file-sharing aren't getting any of the ill-gotten profits, yet they were the ones who actually created the music the RIAA is coercing people into paying for.

So, when the RIAA says this has ended on a high note for me, they are not speaking for me, and they are committing nothing more than defamation of my character in claiming that I, as a consumer and music fan, agree with and condone their behavior. I am disgusted with them now more than ever, and I hope my bringing this to light will, in whatever way possible, chip away at their credibility, because I believe they aren't credible in the least.

The RIAA will not win this battle.

The RIAA will not win this battle. There will always be another way to share files considering the millions of people that take part in this activity. Already people are using p2l or peer2link (www.peer2link.com) that work using sites such as megaupload.com or yousendit.com. Once the user uploads the file, they receive a link which they can post on peer2link.com. Anyone that visits peer2link.com can download the file with ease. It seems that the RIAA is forgetting that business models DO change, and they need to learn to adapt. Come on, look at how well itunes.com is doing!

[R Me]

RIAA == STUPID

While the RIAA may think they can win they never will unless they stop treating music buyers as a cash cow. The price of music is rediculous in all formats. I feel no reason to stop DL'ing music. I also have no fear of the RIAA cause the only way they can find my music is to break the law by snooping on my puter and that will get them sued.

[pmchefalo]

R Me, Ever Heard of a Search Warrant?

You can't sue for "snooping" when the law comes for you. If the RIAA or its agent gets a search warrant, they cam snoop on your PC, confiscate it and sell it a police auction. Looking forward to the day that people realize that freedom does not mean license to do things that are nothing but selfish.

[jeffosoft]

They already won

lol,

They already have and im sure they will thank you for poiting out a new potentinal site to sue.

[Don_Dodge]

Napster-The inside story

I was VP of product development at Napster back in 2000 when the RIAA was trying to shut us down. We pleaded with the RIAA and record labels to do a deal with us and convert our users to a paid subscription model similar to today. We told them about this new technology called Gnutella that required no server and no company to run it, and suggested that it would be better to do a deal with Napster now then to kill us and have Gnutella and its derivatives flourish.

It has taken them 5 years to kill Grokster and they have lost billions in potential revenue in the process. There are still lots of other P2P download systems out there alive and well. Good luck trying to shut them all down.

I wrote a blog on my experiences inside Napster. You can read the inside story at http://dondodge.typepad.com/the_next_big_thing/2005/10/napster_the_ins.html

[thedreaming]

The problem with it all

The problem with it all is that the RIAA and the MPAA are the good guys. They are trade groups which represent the companies which hold the copyright to the materials that are currently being pirated using various methods in the internet.

Stealing is wrong, but the music and record companies think that you should pay retail for the same content, regardless of how to acquired it. So, if I download a song with itunes, I pay .99 cents and if I buy the whole album is $12.99. isn't that retail? Where's my jewel case, where's my cover art? Where's my receipt? What if I chance my mind and want something else, how do I return it? Can I return it?

The online shopping experience isn't anything like the real thing. Alot is missing and if they are only providing the raw data and that's it, I shouldn't have to pay retail for it, but since they'll never lower their prices to match the online model, people will continue to pirate their intellectual property.

[jimdrim]

Thanks - Industry Shill

Did you print your mantra our of the RIAA manual?

[jimdrim]

Shill

Get back in your RIAA box - shill!