War Against Online Music Swap Heats Up

ByABC News
June 24, 2002, 11:30 PM

June 25 -- Napster may be down and out, but the fight between the music industry and the dozens of remaining online file-swapping networks is just beginning.

Since the shutdown of Napster last year, the Recording Industry Association of America (RIAA) has been chasing after companies that offer so-called peer-to-peer networking technology. The RIAA has sued companies such as KaZaa BV, AudioGalaxy, and Streamcast, claiming that the companies knowingly aid and contribute to copyright infringement.

And so far, the music industry Goliath is claiming ground, winning legal cases on its way to conquering even the most well-known file-sharing companies including Streamcast Network's Morpheus program.

Recently, AudioGalaxy in Austin, Texas, reached an out-of-court settlement of a copyright infringement lawsuit filed against it by the RIAA last May. The company agreed to pay a substantial but undisclosed amount to the RIAA and agreed to further prohibit any copyrighted music on its site unless it had the express permission of the copyright owner.

"This is a victory for everyone who cares about protecting the value of music," Hilary Rosen, chief executive of the RIAA, said in a statement. "This should serve as a wake-up call to the other networks that facilitate unauthorized copying."

But among some of the industry opponents still facing litigation from the RIAA, the recent victories are a rallying cry to fight even harder against the industry.

The Betamax Defense

Companies such as Streamcast Networks, Grokster, and KaZaa, believe that they may be able to stand against the RIAA by claiming that their peer-to-peer technology is no different than other media technologies such as the VCR.

The defense is hinged upon a 1984 case involving electronics-maker Sony and the Hollywood studios over the then-new Betamax video recorder technology. The studios argued that the technology would ruin the movie business by reducing ticket sales and pirated movies copied on a Betamax. But the courts sided with Sony and allowed the sale of the device, saying it was capable of substantial non-infringing uses.