Why File-Sharing Piracy Will Never Die
Sandy Brown
06/30/05 - 07:16 AM EDT
Think online file sharing is dead because the Supreme Court whacked Grokster? You need to talk to James.
James, a 25-year-old music fan and avowed Internet pirate who works as an electrician by day, spoke to
TheStreet.com on condition his last name not be used. For him, this week's legal defeat for the peer-to-peer client Grokster has meant few sleepless nights.
"There are so many people working in the shadow Internet," he says. "I don't see the impact."
According to data compiled by BigChampagne, an online media tracking service, roughly 6 million people a month use peer-to-peer software over the Internet in the U.S. The number is conservative because it excludes wireless networks, instant messaging and email, and the increasingly popular protocol known as BitTorrent that splices files from different senders.
"What everyone forgets is that the Internet was designed to facilitate file transfers. It's completely agnostic," said Joe Fleischer, a BigChampagne co-founder. He says Monday's ruling amounts to a big "who cares" and warns that big media will end up looking foolish trumpeting a courtroom victory when illegal activity soars.
To be sure, Monday's Supreme Court's ruling deals a blow to users who want a dedicated application to exchange media content for free. Grokster and other outfits like it stand to be held liable if consumers illegally exchange songs and movies using their technology.
For James and his tech-savvy pals, however, the landscape on which they share music and video files is ever-changing. Increasingly, it encompasses territory such as online chat and instant messaging, in which assigning liability to a specific piece of software could be impossible.
"The analogy that comes to mind is fingers in a dam," one media consultant says. "They win a court victory, but the peer-to-peers will just find a new way to do it. You can't really win the fight against tech progress."
That won't stop content providers from hunting big game on the issue. A research note from market intelligence firm IDC says that by clearing the way for lawsuits, the court gives music and movie studios "an effective way to deal with a problem that has contributed to declining revenue since the first P2P services became available."
It notes, however, that the decision's reach may be limited to companies and others that overtly promote their products as tools to infringe on copyright, and which are subject to U.S. law. Consequently, IDC expects that P2P networks will remain available and that distribution of copyright protected materials will remain an issue for the entertainment industry.
"It was an important battle to win, but there are other battles to be fought," says Susan Kervorkian, an analyst with IDC.
James says he and friends access the latest music, TV and films through BitTorrent and other enabling applications available to anyone who downloads them. BitTorrent, along with Grokster, is decentralized P2P software. Unlike Napster, it doesn't house a directory of the content that is distributed through it.
Kervorkian says it is very likely that services like Grokster will be shut down. Still, whether the same standard that felled Grokster -- intent to distribute copyrighted material -- applies to other protocols like BitTorrent remains to be seen. It might come down to "how they've positioned themselves to consumers," Kervorkian says.
The BitTorrent protocol uses passive "trackers" that allow users to find files among anonymous providers, or seeds. The software locates files at disparate locations online and devises a way to download a full one piecemeal -- a "torrent" -- speeding the transfer and arguably complicating the legal issue of who "sent" it. The technology is the closest thing so far to fully anonymous facilitation of file-sharing, and something like it could eventually make Monday's Supreme Court ruling moot.
In response to the P2P onslaught, big media companies have adopted two main defenses: encryption of files to protect them against transfer, and partnerships with legitimate download conduits where they get a share of revenue.
Just two days after the Supreme Court ruling, Sony BMG and Mashboxx, one of the companies that could have been targeted by the ruling, announced a deal that will see them partnering to offer songs for 99 cents apiece.
For now, the volume of free file-transfer occurring on the Internet dwarfs the paid-for variety, suggesting it isn't just savvy users like James who are breaking the law. Attracting more people to above-board sites will take time.
"You'll always have kids with too much time to misappropriate music," says Jordan Edmiston Group managing director Tolman Geffs, an experienced Internet banker. Jeffs says that the piracy landscape will change for the better once illegal services are taken out and replaced with legal ones. "For the vast bulk of the market, convenience is the driver."
