War Against Online Music Swap Heats Up

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.

And peer-to-peer networking companies say that's a case they can easily make.

"We empower consumers to connect with each other and share all sorts of data," says Steve Griffin, chief executive officer and president of Streamcast Networks. "Consumers make the choice of what to share."

And since that data can be non-copyrighted information — public health warnings or bulletins, for example — as well as copyrighted files, Griffin and others believe peer-to-peer technology would fit the standard of technology that has "substantial non-infringing uses."

A Day in Court

"So long as the technology can be used for good things, that should be the end of [the argument]," says Fred von Lohmann, senior intellectual property attorney for the Electronic Frontier Foundation who has joined the fight against the RIAA lawsuits. "We don't hold crowbar manufacturers responsible for break-ins, just because their tool can be used for such things."

Matthew Oppenheim, senior vice president of business and legal affairs for the RIAA, wouldn't comment on the prospects of the RIAA's case against the remaining file-swapping networks Streamcast Networks, Grokster, and KaZaa. But he did note that the RIAA is continuing to press forward and is preparing for the Oct. 1 trial date set by U.S. District Court Judge Stephen Wilson .

Industry analyst P.J. McNealy with GartnerG2 says that he isn't sure that technology companies such as Streamcast will win the fight based on their defense. "I'm not a lawyer, but what I can tell you is that historically, the courts have consistently come down on the side of the intellectual property owners," says McNealy.