[Infowarrior] - Hilary Rosen's Change of Heart

[Richard Forno]

 The Supreme Wisdom of Not Relying on the Court
http://www.huffingtonpost.com/hilary-rosen/the-supreme-wisdom-of-not_b_3221.
html

The entertainment industry is anticipating -- as early as tomorrow -- a
decision in the ³MGM v Grokster² case. This is a case about whether or not
those businesses creating and promoting P2P software for file-sharing are
liable for the infringements of copyright made by the users on their
networks.

This is a big case with lots of money poured into it from all sides.
It is said that the Supreme Court¹s decision will be one of the most
important copyright cases ever on the books. I think it has all the makings
of being famous for another reason. Because while the victory of whoever
wins maybe important psychologically, it just won¹t really matter in the
marketplace.

I was Chairman and CEO of the RIAA when we developed the case almost five
years ago. Suffice to say it was a frustrating time. Napster had been shut
down rather than be licensed by the record companies and here were a whole
group of new services that specifically avoided the legal frailties that
Napster demonstrated in court. I thought that there was a need for a legal
ruling at the time, but I also expected so much progress in the marketplace.

So why won¹t this case matter now in the marketplace? Because by now SEVERAL
HUNDRED MILLION copies of this software that the entertainment industry
would like to vanquish have been downloaded to individual computers around
the world. They go by names like Grokser, Morpheus, Limewire, eDonkey, Bit
Torrent, Kazaa, etc.) And each time, there is a successful enforcement or a
new way to catch the developers with copyright liability, they reinvent
themselves and generate another two or three year court proceeding. And now,
a majority of them are hosted outside the United States. There is no court
ruling whose enforcement can keep up with this. Sure, it might affect some
venture capitalist deciding where to put money for a product. But none of
these services since Napster have required venture money. They grow
organically, because they are serving a still unserved desire. Do people
like free content, sure, but they also like content. All the stuff - when
they want it - to feel like free even if it might not be free.

What about the consumer you say? Oh yeah, us. Well, what the consumer wants
has been ignored far too often by both of these sides. The technology
industry makes money from hardware and software innovation. They have seen
that with enough ³innovation² their consumers can get all the content they
want for free without it really being the tech industry¹s problem to worry
about the investment required to make that content. And those that do try to
find common ground and acknowledge that there can be good guys and bad guys
in their business as well, get so quickly attacked by their own that they
withdraw. And the entertainment industry is still far too often spending
time comparing the profit margins and risk of new ideas to an earlier time
when the world was less digital.

So here is the crux of the problem. These services have traffic at a rate 40
to 50 times the traffic of legitimate sites. Yet, the amount of time and
money wasted on besting the game by the entertainment and techonolgy
industries is huge. This volume needs to be embraced and managed becasue it
cannot be vanquished. And a tone must be set that allows future innovation
to stimulate negotiation and not just confrontation.

Sure iTunes is great but it doesn¹t have enough songs at its music store.
And when you find songs you want at other stores like Yahoo, Rhapsody,
Napster and AOL, you can¹t put them in your iPod without denigrating the
sound quality and working around the system set up to prevent you from doing
just such a thing. And none of these services have all of the live
recordings and bootleg tracks that I have said, since the days of Napster,
is one of the most appealing aspects of P2P services.

And don¹t get me started on the movie business. I have met countless times,
at their request, with the studio CEO¹s to discuss ways to avoid the
mistakes the music industry made. The studios have the potential to learn
from past problems. Unlike the record industry which had relied almost
solely on physical sales, the studios have been more sophisticated
businesses that relied on multiple revenue streams for a long time. But,
illegal movie downloading is growing so rapidly, and consumer alternatives
are nowhere near on the front burner as they should be. The central premise
that tech will "wait until we are ready with our business models" is not
going to work for the movie and television indsutries either.

So what the consumer is left with now are a few legitimate services that
offer some great content and lots more illegal P2P choices that offer ALL
the content plus a healthy dose of spyware, bad files and unwanted risk.

These are not legal decisions or trade association PR responsibilities on
either side. They are fundamentally business issues that must be addressed
in the marketplace.

The entertainment industry has no choice right now but to speed up its
licensing activity and risk-taking and the tech industry should start caring
that they are not helping their customers when the easiest way to get
entertainment content is to also accept spyware, viruses, and bad files in
the process. Sure there are some promising things happening, but they are
not being embraced nearly fast enough.

All the wisdom of the Supreme Court will not change that bottom line.
______________________________________________________________________

*for those who haven't heard the basics - P2P services create a network of
users who can connect directly to each other. Napster relied on a central
server to distribute all the files therefore creating a record of each
transaction. Therefore, the owners of these services like Grokster argue
they have no control over what their users are doing. The copyright
community argues that it is the copyrighted works that draw users to the P2P
services and the services are creating a sham ignorance since they profit
from the users on their network though the sale of advertising and use of
spyware ad and they have demonstrated control over the years of their
network through software updates, porn rules, etc. There are certainly more
arguments on both sides than these and I won¹t go into the details. If you
are interested in the details go to MPAA.org, MUSICunited.org, and EFF.org.