The Law and P2P

Anonymous Coward writes "Here's some interesting legal commentary on the continuing saga of copyright enforcement and Apple's attempt at a constructive approach."

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[cultobill]

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Why Grokster and Morpheus Won, Why Napster Lost, and What the Future of Peer-to-Peer File Sharing Looks Like Now
By CHRIS SPRIGMAN
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Thursday, May. 08, 2003

On April 25, in M-G-M v. Grokster, U.S. District Judge Stephen Wilson dismissed a copyright infringement lawsuit brought by a group of movie studios and record companies against Grokster and Morpheus. (Grokster and Morpheus are peer-to-peer services that enable users to share copyrighted music, movies, and other content over the Internet without paying a dime to the copyright owners.)

Many observers were surprised. They had assumed that Grokster and Morpheus would - like Napster in A&M Records v. Napster - be shut down for facilitating individual file sharers' copyright infringement. But Judge Wilson, after carefully examining the underlying technology, found that though users' infringement was occurring, Grokster and Morpheus were not contributing to or authorizing it. Thus, they could not be held liable.

The decision is obviously bad news for Hollywood studios and record companies. If it is upheld on appeal, they will continue to face wide-scale infringement of their copyrights.

If the decision is indeed upheld on appeal, will that be good news for consumers? That is a more complicated question. The answer depends heavily on Hollywood's reaction. Will it continue its battle on other fronts - focusing perhaps not on the services, but on their users? Or will it, instead, launch new strategies to take advantage of the powerful business opportunities that peer-to-peer might provide?

Comparing and Contrasting Grokster, Morpheus, and Napster

To see what is likely to occur in the future, it's helpful first to take a closer look at the differences between Grokster, Morpheus, and Napster.

First, Grokster. It offers for download a branded version of software owned by Sharman Networks, a company incorporated in Vanuatu - a remote Pacific island chain that markets itself as protecting corporate secrecy.

When a user boots the software, his computer is directed to sign on to a "root supernode" (a server owned by Sharman), which then directs the user to a "local supernode." The "local supernode" is some user's computer, which has been temporarily designated to route file-sharing requests among a large number of other users. (A particular user's computer may function as a local supernode one day but not the next; the process is largely invisible to the user).

Suppose a Grokster user requests a certain file - it could be a song, a movie clip, a video game, or an e-book. His search request is relayed among a large number of local supernodes and on to individual users. Once the requested file is found, it is transferred directly between the users.

Now let's look at Morpheus. Its software is based on the Gnutella peer-to-peer platform, built from "open source" code. Morpheus users connect to the Gnutella network by contacting another user who is already connected. (This initial connection is usually made by linking to a computer on the network that maintains a constantly changing list of IP addresses for certain currently active nodes.)

The Gnutella network is a "pure" peer-to-peer network - composed of users running Gnutella-compatible software such as LimeWire, BearShare and Shareaza. It does not use supernodes. Instead, user search requests are passed from user to user in the network until the requested file is found. The file is then transferred directly between the two users.

So what's the difference between Grokster and Morpheus, on one hand, and Napster, on the other? It is this: when Grokster and Morpheus users search for and receive digital files, they do so without information being relayed to or by any computer owned or controlled by Grokster or Morpheus. Thus, as the district court noted, if Grokster or Morpheus shut down, their users could continue to share files with little or no disruption.

In contrast, Napster users relayed se

Re:Wait a min...

[Abm0raz]

Did you RTFA? If you had, you would have noted the "Compare and Contrast" nature. For brevity's sake:

Compare =({"music", "file-sharing"});
Contrast = ({"p2p", "client-server", "free/$.99"});

It also compared them to other RIAA sanctioned online music systems that are failing miserably because of their price structure. The fact that the article finishes with a very viable (IMO) business model that would not only increase the distribution and profits for the MPAA and RIAA backers, but also lower the price for consumers is a welcome change from the rampant "RIAA BAD! MPAA BAAAAAD!" arguments I see.

The article is a how-to for both sides. It points out the flaws of failed file sharing systems as well as what the current ones are doing right (and why the corporate strongmen hate them for it). It also looks at the other side as to why the corporate anti-piracy measures and their on-line distribution methods are both failing and why Apple sold 1,000,000 songs in it's first week.

From the article, only apple users can use their service. Apple has 4% of the computer market. I'd guess about 20% of the world is on the net. 5,000,000,000 people on the planet. This leads to:

5,000,000,000 * .2 * .04 = 40,000,000

At 1 million songs, that's 1 song for every 40 MAC users. Now consider that MACs have a heavy niche in primary and secondary education facilities where kids under the age of 18 can't use the service or in college computer labs where the users can't keep the songs or play them at their fancy (at least not like a home computer). All in all, the overwhelming early success of MACs new service shows that at a reasonable price, people ARE willing to pay for music online, but only if it is quality sounding, fairly priced, and their's to own after purchase.