Lawful P2P Expected to Thrive in Redefined Marketplace
As stakeholders and lower courts digest last month’s MGM v. Grokster ruling, uncertainties may emerge. But one thing is certain -- the market for legitimate peer-to-peer (P2P) services will thrive, experts agreed Fri. at a Capitol Hill luncheon. Advocates on both sides of the landmark Supreme Court case said the table is set for a highly competitive, entertainment industry-friendly P2P smorgasbord.
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Within days of the ruling, announcements of P2P companies with the blessing of the recording industry - and some even with deals -- popped up, RIAA Pres. Cary Sherman said. Mashboxx, iMesh and Peer Impact are a few frontrunners speeding their beta testing after the high court ruling that software providers are liable for users obtaining copyright infringing music and movies (WID June 30 p5). “They've got a business model that captures the benefits of peer-to-peer but avoids the legal problems,” Sherman said, adding he’s “pleasantly surprised” at the quality of the product demos he has previewed. Consumers will be happy with “how much better the P2P experience is going to be when it’s legal,” he added.
P2P firms, which until now have had to “hide under the Betamax doctrine,” will benefit from legitimacy, Sherman said. Legal services will be able to learn more about their users and what files they share, as well as what consumers want and how to satisfy them, he told a room packed with Hill staffers, lawyers and analysts. Besides proliferation of lawful P2P applications, Sherman hinted at additional RIAA activities that “make it very clear that this decision can be something of a milestone in terms of the relationship between P2P and the content community.” He said he couldn’t elaborate.
High-tech attorney James Burger said he is “tremendously thrilled” at Sherman’s stamp of approval for legitimate P2P networks but worries that, with music in particular, “people like getting stuff for free.” Licensed digital music providers historically have had trouble offering all the tracks consumers request -- a problem that some argue sent users back to illegitimate P2P programs. The ruling should encourage aggressive pursuit by the music industry of ways to offer consumers wider song selections. That, combined with govt. enforcement and a healthy marketplace, will “drive the nail in the coffin” of illegal P2P services.
“Grokster is really the first word and not the last word,” Public Knowledge Pres. Gigi Sohn said: “We have to wait and see how the lower courts interpret it.” She hopes for a fairly narrow interpretation of the high court ruling that targets only “bad guys,” accompanied by good faith discussions between content and high-tech players. Sohn said the content industry shouldn’t use the decision as a weapon. “If it’s used to hold a gun to people’s heads and say ‘build your machine that way,’ at that point maybe we'd need an adjustment.”
Sohn said the content industry has had a banner year, comparing its record across govt. to the Washington Nationals baseball team’s. Along with a favorable Supreme Court ruling, she said, movie studios hit a home run with congressional passage of the Family Entertainment & Copyright Act, which provides new deterrents against intellectual property (IP) theft. Hollywood also scored big with a dramatic Justice Dept. escalation of antipiracy efforts, in recent months expressed in a number of major crackdowns on criminal infringers.
Sohn’s message to the RIAA and MPAA was straightforward: “There’s no other enforcement tool that you need. Now is the time to compete in the marketplace.” She urged the industry to “stop asking Congress for tech mandates.” “You're 3 for 3 -- you shouldn’t want any more [and] shouldn’t need any more.” Her message to Congress, which has been flirting with holding Grokster-related hearings, was: “Have your hearings, but Hollywood and the recording industry have all the tools they need to stop indiscriminate redistribution using P2P technology. Nothing more is necessary.” She joked that lawmakers have to find something to do “before Bush names a new [Supreme Court] justice” to replace retiring Sandra O'Connor.
Panelists at the Progress & Freedom Foundation event also mulled the fate of P2P services that aren’t profit- oriented, like Grokster, and don’t necessarily urge users to swap copyrighted material. Sherman said the Supreme Court decision is “not a panacea” to problems plaguing the industry -- “it’s just an important development and will steer behavior in a better direction.” Burger said “you can’t legislate against someone inventing in their garage and throwing it out on the Internet.” He said the only way to defeat “the kid who has more time than common sense” is fostering a licensed P2P market.